Coworking is a key economic development tool for cities of the future.
Cities not named New York or San Francisco are finally having their time in the startup spotlight. As we enter the Third Wave of the Internet (as AOL co-founder Steve Case calls it), cities like Austin, Denver, and Kansas City are becoming tech and entrepreneurial hubs in their own right. Case even gives a name to these Middle America towns poised to challenge Silicon Valley: Second Cities.
Second Cities are now center stage as technology seeks to disrupt legacy industries like healthcare and agriculture. And since the workforce is more mobile than ever, entrepreneurs can choose a place with all the amenities of coastal cities, but at a fraction of the cost of living.
Urbanization poses a number of challenges for cities, outdated infrastructure being a big one. But for places like Kansas City to become and stay competitive, the key is not just development. The city’s most precious resource is its people.
If a cities want a chance at big economic development prizes like Amazon’s new HQ2, they first need to focus on attracting and keeping good people. We need to figure out ways to make people happier, safer, healthier, more productive, and able to function better as human beings.
This is why cities need shared workspaces and coworking now more than ever. Let me explain.
Shared Workspaces for a Mobile Workforce
According to the IDC, nearly 75% of the US workforce will be mobile by 2020. This number is staggering, and it carries serious consequences for cities as well as workers. Namely, how do we help workers feel connected when they can work from anywhere in the world?
The more we are digitally connected, the more we are actually isolated. People confuse a tweet or a text for a relationship. Being face-to-face, especially early in a relationship, is still critically important. We still need in-person meetups to get to know someone on a human level.
Shared workspaces create that opportunity. You can find a desk anywhere, but what shared workspaces really offer is access to people. You’re able to interact, ask for help, and offer advice to peers inside and outside your industry. As a matter of fact, these interactions are part of our product.
There are numerous studies on how interacting with other people makes us happier, and being happier makes us more productive. So as our workforce becomes more mobile– and potentially more isolated– shared workspaces will be necessary for fostering and keeping talented people.
Shared Workspaces are Hubs of Innovation
Cities today need industry-defining innovation. This type of innovation builds businesses, creates jobs, and attracts talent, which then brings new ideas and even more innovation.
This virtuous cycle is kicked off by the ability to look at a problem in a new way. And for this, nothing is better than the diversity of perspectives you get in a shared workspace.
Some of the most disruptive concepts and applications come from people outside the industry. Ask companies like Netflix, who hosted a $1 Million Innovation Contest to improve their movie recommendation algorithm. The competition attracted students, professionals, and hobbyists from all over the world, many of whom teamed up to increase their odds of winning. In the end, Netflix had a matching algorithm that improved recommendations by 10%. A team comprised of researchers from the United States, Austria, Canada, and Israel took home the $1 Million prize.
Breakthrough innovations come from people outside the industry domain. You have to be able to see things differently. That’s why it’s so important to have spaces where people of different backgrounds can interact and team up.
But it’s not just entrepreneurs and small businesses who benefit. Large corporations are setting up satellite offices in coworking spaces, too. They want to immerse their employees in a more progressive culture, where they can share ideas with people outside the company and industry. These new ideas may kick off a cycle of innovation within the corporation.
Corporations also look to hire and develop new talent within shared workspaces. They may contract with a freelancer in the space and say, “Wow, they were really good. We should bring them on the team.” They might even seek to acquire an entire startup if it makes sense. By setting up in coworking spaces, corporations give themselves access to ideas and talent they wouldn’t have otherwise.
Shared Workspaces as an Economic Development Tool
Shared workspaces have a direct and indirect impact on the 3 key economic development stakeholders: entrepreneurs, corporations, and the cities themselves.
Entrepreneurs need a supportive ecosystem to thrive. Ideas, industry knowledge, partners, and resources are all crucial to their success. An entrepreneur finds these things in a coworking space and through the connections they make there. Shared workspaces are an incubator for new businesses.
Corporations need new ideas and new talent from outside their own company and industry. Big businesses want to team up with smart, agile entrepreneurs who can help them kickstart the virtuous innovation cycle. Shared workspaces bring corporations and entrepreneurs together.
When entrepreneurs and corporations get together, cities are the beneficiary. Entrepreneurs start businesses that bring new jobs to the area. Corporations grow by acquiring those new businesses, or partnering up with them to create breakthrough innovations. This collaboration creates more density, vibrancy, and resources that help the city thrive.
The Time for Shared Workspaces is Now
Shared workspaces are factories for innovation and the human relationships that accelerate it. They are a homebase for a mobile workforce, a shot of creativity for corporations, and an economic engine for cities.
If a place wants to compete in tomorrow’s economy, they need to encourage and invest in shared workspaces. The best time to start building the infrastructure of the future was 10 years ago. The second best time to start is now.