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Digital Business insights: Stranded assets
Digital Business insights by John Sheridan >>
DO YOU NEED an office? That is the question our accountant asked when we started the business 13 years ago. You are a digital business, why don’t you practice what you preach? Do everything online.
Good advice. Today, there are more than 20 of us working together and we still don’t need an office.
Offices are only worth what you can do with them.
If your competitors can do what you do but without the cost of paying the lease for an office building, they are one step ahead of you in efficiency. 
What is the value of the office? Offices provide a workspace and a meeting space. Knowledge work can be done anywhere. And most meetings can be managed perfectly well online, in cafes, homes or other people’s offices.
In a few cases your office is a shop window that says something about your capability, your business, is part of your brand message, and a symbol of what you deliver.
So if you are an advertising agency then selecting the right office is just part of the theatre, part of the creative show business that you offer clients.
If you are a law firm, then the same could be true, but it is a different kind of show business, less theatrical, more conservative and more reassuring.
If you are an accountant, you don’t want to go too far with your fitout, or your clients will begin to wonder who is paying for the views from the 20th floor.
These days, that element of theatre is diminishing, especially for those businesses where the product or service is delivered online. For those businesses an office isn’t what it used to be. And in many cases the office isn’t there at all.
OFFICES CHANGE SHAPE
But for those businesses that still need an office, the size, shape and layout is evolving fast. Workers need both privacy and community. There is social dimension that cannot be fulfilled completely online, especially for the young.
Most knowledge workers get more work done in private and peaceful situations, with no interruptions, still able to access others electronically. Telework or working from home is becoming commonplace.
So there is an argument that 21st century ‘offices’ should just comprise meeting rooms and social spaces – boardrooms, staffrooms, kitchens and lounges, and these are all provided informally in cafes, libraries and restaurant areas in cities anyway.
The Queensland State Library is a perfect example of architecturally designed integrated, private and shared spaces, a template for the ideal 21st century working space.
The creation of similarly designed decentralised, meeting rooms, private and social spaces would help everybody in the 21st century, except for commercial property developers who have already built and manage thousands of 20th century stranded assets.
Buildings are worth what you can do with them. And the pressure for change will come from customers and from competition.
STRANDED ASSETS
Drive through any commercial district in Australia’s capital cities and the ‘for lease’ signs are everywhere. We are witnessing permanent disruptive change at its ugliest.
Stranded assets on every street, in every city and in every state. And it will only get worse.
If you look at another example of stranded assets – power stations and distribution systems, then you get the idea. More disruption. More permanent change. It is a digital revolution.
Power stations are out of date. Power generation and centralised energy distribution as a model is dead and dying, threatened by solar driven, distributed personal and local energy generation and distribution.
This disruption has been generated mainly by rooftop competition from solar (and batteries), and the shift will continue over the next few years as solar (and batteries) become more efficient, supported by smart meters and other technologies promoted by a new breed of energy entrepreneurs, which will even include some of the existing energy distributors who can read the writing on the wall.
That will leave coal only as a resource for export to the second and third world, exporting our ‘old world’ with all the moral issues, trade agreement, and carbon mitigation agreement implications that are tied up with that.
Owners of power stations and distribution networks already know this (and have known it for some time) and are trying to offload their ‘assets’ to anybody dumb enough or smart enough to buy them.
Somebody in the market will always be able to see value in a ‘right priced’ investment and will manage it wisely for short-term return and closure.
But for state governments, there is no value in owning a long term stranded asset that will become a massive dollar drain in the medium to long term. So state governments are all struggling to get out of the energy business, and voters should let them. It is not the business state government should be in.
Competition should be encouraged, and that means supporting the ‘new’ clean and green, generators and distributors not punishing them.
It means making way for the change that has to come anyway, and managing it in a way that doesn’t disadvantage renters and the poor.
That is government’s role in a revolution that is happening right here, right now.
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John Sheridan is CEO of Digital Business insights, an organisation based in Brisbane, Australia, which focuses on helping businesses and communities adapt to, and flourish in, the new digital world. He is the author of Connecting the Dots and getting more out of the digital revolution. Digital Business insights has been researching and analysing the digital revolution for more than 12 years and has surveyed more than 50,000 businesses, conducting in-depth case study analysis on more than 350 organisations and digital entrepreneurs.
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