AbstractThey were invented already in 2006, yet five years ago nobody knew they existed. Now they can be found in many of the world’s larger cities: co-working spaces, desks that come with the complete infrastructure of an entire office which are rented out by service providers at an hourly or daily rate, or longer. The demand is being fueled by knowledge workers, company employees who want to avoid the commute and be part of an innovation hub, freelancers who are tired of working at the kitchen table, and project nomads who have sipped enough Starbucks coffee. The article describes how the concept works, looks at some examples of providers and users, and demonstrates how co-working can inspire innovation, creativity, and interconnection.

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Marco Peise’s office used to be a fire-house. A large room under the roof, it is shared by 15 individuals now. At each desk sits the owner of a different small business. They all run their own compa-nies, but they share the Wi-Fi, the print-er, the photocopier, and the office kitch-en. Marco decided to rent a workspace so he would not have to work from home. “A home office was never really an option for me. I just cannot concentrate at home. There are too many distractions.”Since 2013 Marco Peise has been work-ing at a desk provided by Fireworks, a Ber-lin-based company that offers co-working spaces. Each workspace in the open-plan office in Berlin’s Wedding district is leased individually and is fully equipped with everything that today’s flexible office workers need to get on with their job. “The job” for Marco is Sunride, a web portal he co-founded, and through which he runs a virtual renewable energy consultancy. Having a leased desk saves him the long commute between Wedding and Pots-dam, where the company is located, and where the other Sunride workers spend their day. “Thanks to co-working, I am spared a one-hour commute twice a day,” the entrepreneur enthuses.

A Quarter of a Million Tenants Marco Peise is part of a growing move-ment. According to Trendscanner, an

INSPIRING PLACESHow Co-working Spaces Change the Way We Work

In today’s knowledge economy, co-working spaces are the new hubs. They are driving innovation, creativity, and collaboration.

by Axel Gloger

information service provider, every day 250,000 people worldwide make their way to a leased desk in a co-working space, often in their own neighborhood. “I work where I live,” is the new mantra of today’s knowledge economy workers. They take full advantage of the freedom this form of work offers them (Plöger 2010, 91).

But co-working spaces do not only offer greater flexibility and time saving. The movement is leading to the evolution of a whole new world of work. In many urban environments where this service is avail-able, it is almost as easy to find a fully equipped and professional working space as it is to order a pizza via telephone. A co-working space is a base for flexi-ble knowledge workers (see box 1 on the next page), a vibrant environment to which they can return to network and form rela-tionships, make use of synergies, and re-flect on ideas with other creative people. They are all individuals, all working for dif-ferent employers on different projects. But

In many urban environments it is almost as easy to find a fully equipped and professional working space as it is to order a pizza via telephone.

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together, Marco Peise and his co-work-ers form a crowd that is capable of cre-ating new forms of innovation and intelli-gence (Tapscott and Williams 2006, 21). Let us have a look at further examples to see how the system works in prac-tice: Markus Matthaei works for Huber-media, an IT service and geo data com-pany based in the village called “Lam” in the Bavarian Forest, Germany. The vil-lage has 3,000 inhabitants, and it is sit-uated far away from the next major city. Hubermedia employee Matthaei lives in the Bavarian capital Munich, a two-hour drive away from Lam. Matthaei is happy to have a co-working desk at Combinat 56 in the Munich Schwabing area. Com-binat 56, the office landlord, provides ev-erything an office worker needs for his working day: power sockets, Wi-Fi, a photocopier, and as much coffee as you could wish for. “I work at my co-working space two or three days a week. The rest of the time I spend with customers,” is how Matthaei describes a typical work-ing week. With its 350 square meters, a “desk farm” of 30 working spaces, con-ference rooms, a soundproof telephone booth, and an office kitchen, Combinat 56 offers smart premises, and is indeed the perfect business environment.

New Offline Networking for Knowl-edge WorkersFor Matthaei’s employer Hubermedia, who pays for the Combinat 56 desk, co-working is more than simply having ac-cess to an external desk somewhere. It means that Hubermedia can have an employee located close to the compa-ny’s customers in Munich. Matthaei can also take advantage of all the resources a state capital like Munich offers, as well as build potentially useful relationships with other tenants of the co-working space. There is a great sense of commu-nity, of networking, of helping each other out, and of sharing new ideas. Combinat 56 also promises: “Really getting down to work.” The company sees the leased desk as a form of “third place” – what Starbucks is for Latte aficionados: a ha-ven located somewhere between work and home.But who triggered this innovative idea? The co-working movement originated in California, USA, in 2006. It was in San Francisco where self-employed market-er and social media strategist Tara Hunt decided that she had enough of working at the dining room table. She started to look for an attractive alternative. “I want-ed to imitate what it means to work in

Box 1: Profile of Co-working Spaces ► Function: Co-working spaces are shared premises that are used as the main

place of work by various independently operating individuals or firms. Inter-connections often develop between the tenants because of shared values and a variety of skills that complement each other. Co-working space manag-ers encourage such networking activities among their tenants.

► Users: The tenants work independently on various projects. Most of them are freelancers, start-ups, home office fugitives, or company employees working in flexible surroundings.

► Infrastructure: Internet (Wi-Fi), desk, coffee machine, conference rooms, telephone booths for undisturbed mobile phone usage, photocopiers, and printing facilities form the basic equipment of most co-working spaces.

► Market and Price: The first co-working space opened in San Francisco in 2006. Today, there are over 2,500 locations, 1,160 thereof in Europe. Mem-bership is similar to gym membership, and prices vary depending on location and length of usage. A ticket for one day starts at 10 Euros, a full month costs between 179 and 400 Euros. Add-ons such as conference rooms or team of-fices can cost more.

Box 1: Profile of co-working spaces (source: Deskwanted.com 2013 and author's research)

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a cool company,” she says when asked what had motivated her to invent and es-tablish the first co-working space togeth-er with two colleagues. “We wanted to enter into meaningful relationships with other knowledge workers, and we want-ed not to be lonely at work.”Not only founders of start-ups feel this way; knowledge workers who are em-ployed by big companies but who work from home know what it means to feel lonely. On some days, the only contact you have with the outside world is “you got mail”.“We wanted real contacts, for ourselves and for others,” Tara Hunt explains. Her start-up with the name “Citizen Space – A Nicer Place to Work” quickly became popular, and soon there were two more Citizen Spaces, one in San José and one in Las Vegas.

Like a Business-Style FamilyEvery co-working space that has been created since is designed to provide its us-ers not only with a desk but also with col-leagues – an approach that goes straight to the heart of the concept of being a knowledge worker (Drucker 1985, 15 –16).How does the knowledge exchange work? At Mobilesuite (see figure 1), a co-space provider in Berlin, the notice board schedules an informal “communal breakfast” once a week. Owners Simon Schier and Philipp Roth put bread rolls, cornflakes, and coffee on the breakfast table and everyone is invited to join and do some networking before work be-gins. For those who want to network in a slightly more businesslike fashion, Schi-er and Roth have introduced the “Demo Day”. Once a month, four or five co-workers give a 10-minute presentation about their company, their products, or services. “This is a great opportunity to find out what the guy at the next desk is doing all day. And you may even discov-er that you have something in common,” Schier explains.At Betahaus (see photograph on page 16 and figure 2 on page 20), another

Berlin-based co-space provider, every last Thursday of the month, there is “Be-tabeer” – an invitation to drink a beer to-gether after work. Besides, the Betahaus managers also organize numerous cours-es and workshops for their tenants.

What co-working space providers have realized is that an alternative to the regu-lar nine-to-five schedule is needed. That is what makes the difference between Betahaus & Co and the traditional rent-ed office spaces. If you rent a space with a traditional provider, like Pedus Office or Regus, you only get an office with a light-blue carpet and a key to lock your door – but no “family”. Co-working, on the other hand, is an open system where people really work together, not only next to each other. It is the events that make going to work in a co-working space re-semble being in a regular company of-fice – providing the social contact that the nomads of the flexible world of work-ing need as well. Knowledge workers from large companies, self-employed, remote workers, start-up founders, and

Every co-working space is designed to provide its users not only with a desk but also with colleagues – an approach that goes straight to the heart of the concept of being a knowledge worker.

Fig. 1: The Mobilesuite office in Berlin

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small business owners – they all feel at home here. And they can get a night-ac-cess key, if they want.

The Number of Co-working Providers Continues to Grow One reason why co-working has become so popular lately is the rise of the itinerant worker. The office has become portable. Laptops now replace folders and files, and snail mail has been pushed to the sidelines. “The office no longer consists of bricks and mortar,” says Madeleine von Mohl, co-founder and CEO of Be-tahaus. “Today’s knowledge workers can decide for themselves where they want to work.” This is a format that really suits the “Generation Y lifestyle” (Gloger 2012, 77ff.). Co-working spaces have been mushrooming worldwide in recent years thanks to a semi-nomadic working style and an increasing number of freelanc-ers. They have become a universally ac-cepted new form of service (see table 1). The movement may still have a long way to go until it reaches the same number of branches as Starbucks or McDonald’s have, but considering the relatively short

time period it has been around, its growth is comparable. The market is growing at an enormous pace. In just one year, the number of co-working locations has dou-bled (Deskwanted.com 2013). Special-ists believe that this rapid development will continue.Bettina Sturm is among those who profit-ed from the boom. The owner of the ca-reer re-orientation agency called “Dein Copilot” moved into her co-working space in September 2012 – after an irregular of-fice career. First, there was the home of-fice. What she liked most about it was that it was so convenient. She lived where she worked, and she invited the clients into her living room. “There was no commute, and I invested the time I saved in my consul-tancy work.” But she soon realized that a home office also has its drawbacks. “It is difficult to draw the line between work and private life,” she says. “I also did not real-ly like my candidates being able to see which book I was reading at the moment.”She gave up the comfort of her living room and started meeting her clients in a variety of surroundings – with a variety of results. She interviewed them in the lo-

Fig. 2: The Betahaus Café,the heart of theBetahaus co-working space in Berlin

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cal café, but this environment turned out to be too loud. She used a designer furni-ture showroom. “That was original, but it was always a bit of a hassle to get hold of the key.” The co-working space she finally found is ideal, she says; it provides an of-fice space in which she feels at home and the necessary conference rooms.

New Spaces for Natural NetworkingOne of the reasons co-working is so suc-cessful is that it creates something that ev-eryone is looking for, but which only rarely actually happens: synergy. Co-working is not only a great way to feel less isolated at work; some tenants also pick up new business assignments and take over man-dates from each other. Betahaus manager Madeleine von Mohl describes the inter-disciplinary melting pot in her co-working space. “App developers, designers, com-munity managers, architects, PR people, software programmers, product develop-ers, company employees, project manag-ers, consultants, a small legal practice.” It is the ideal climate for innovative net-working in real time, creating structures that would not have happened otherwise. In a small environment, there is an abun-dance of highly diverse knowledge, and the tiniest impulse can trigger new ideas and projects. Co-working space tenants know that the final nugget of information, the last building block they need for de-signing or implementing an innovation is often only a few desks away. The content writer needs an app, the product devel-oper needs help with a software problem, and sometimes a group of tenants get to-gether to work on a single project.“We form virtual companies. They exist for a certain length of time, until they have achieved what they set out to do,” says von Mohl. If you have a desk at Betahaus, Mobilesuite, or Combinat 56, there is a good chance that new partners and cli-ents are not too far away. Because of such ad-hoc alliances there has been a big hype about co-working spaces recently. “There is always some-thing happening. It is a dynamic environ-

ment,” says Mobilesuite manager Roth. If you have an innovative idea, you find al-lies overnight. Ideas spread like wildfire. Madeleine von Mohl describes the vi-brant atmosphere at Betahaus as follows:

“Co-working is like the offline extension of social networking. Everyone is con-nected, directly or indirectly. And every-one is connected through a kind of com-munal spirit. There are no big barriers to working together.” Such an atmosphere offers knowledge workers two crucial in-gredients for success: pleasure and func-tionality.

Transaction Costs Close to ZeroFrom an economic point of view, one of the major contributions of co-working is that it lowers the barriers and the transac-tion costs of co-operation between knowl-edge workers. Tenants of co-office spac-es do not need to write letters or e-mails to get in contact with someone to create new value – they can do it without even a

Table 1: The top six cities with the most co-working space providers (source: Deskwanted.com 2013)

Position City Number of Co-working Space Providers

1 London 81

2 New York 71

3 Berlin 68

4 Tokyo 63

5 San Francisco 46

5 Madrid 46

In a small environment, there is an abundance of highly diverse knowledge, and the tiniest impulse can trigger new ideas and projects.

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mile of business travel or time-consuming co-ordination in advance. Any co-opera-tion is available at arm’s length, the cost of an extra contact and expanding the net-work is close to zero thanks to the bor-derless infrastructure the tenants find in

nearly any co-working space in the world. This news has already reached firms out-side the co-working universe, with large and small enterprises showing an inter-est. They want to know how they can profit from the very special buzz that Betahaus, Mobilesuite, and all the rest create. They have started to send out their staff into the brave new world, getting them estab-lished at their own co-working desks, of-ten for projects or special assignments.The contrast could not be greater. Em-ployees from large well-established firms leave their offices, forgetting the thick car-pets, heavy glass doors, and dress code, and find themselves in an entirely differ-ent environment. With its assortment of

vintage IKEA furniture, the place rath-er looks like a university learning support group than a project team. But do not let yourself be fooled; these co-working ten-ants are hard-working, and they are pro-ductive. It would not be the first time that they are doing nothing less but redesign-ing the future.

How Established Companies Are Using the Creative SpaceFor example, the mineral oil business: Madeleine von Mohl describes how 13 managers of a multinational oil company once came to Betahaus with the intention of starting a new innovative project. They had been looking for an innovative sur-rounding – and they found exactly what they wanted in Betahaus. In the busy at-mosphere of the former factory building in Berlin they quickly formed a creative project team with a few start-ups from adjacent desks. “We immediately got a lot of chances for networking with a very high impact,” one of the participants from the oil company praised the move. After a few days, the project team had come up with models for the gas station of the future. “They left with a whole batch of ideas,” reports von Mohl.Other companies which are taking ad-vantage of the setting include Deutsche Telekom, Bayer, TUI, and online fash-ion ship Zalando. “They want to get out of their customary surroundings, to see things from a new angle,” says Mobile-suite co-manager Simon Schier. One ex-ample is Armin Molla, corporate develop-er of Ergodirekt, a subsidiary of the Ergo Insurance Group. He and his team re-located from Nuremberg to Berlin’s Be-tahaus because they wanted to be in the middle of this melting pot of innovation. Their job is to develop mobile solutions for insurances. According to Molla, the advantage of moving into the Betahaus is obvious: “It is much more than just rent-ing a desk in a building – we get freelanc-ers and start-ups thrown in!” Those are just the resources that Ergodirekt was lacking for its project.

Key Learnings

► Co-working spaces have established themselves as a new third place, between the home office and the regular office at work.

► A wide range of tenants profits from temporary office space: flexible knowledge workers, consultants, individu-als working on projects, freelancers, and employees of big companies.

► Transaction costs for networking are low in co-working spaces, and the conditions for forming impromptu orga-nizational structures are excellent – providing a strong incentive for innovation and creating new knowledge.

► In tomorrow’s knowledge economy, co-working spaces will become firmly established as the hub of networking and the flexible exchange of know-how beyond company boundaries.

Any co-operation is available at arm’s length, and the cost of an extra contact and expanding the network is close to zero.

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Service

AUTHOR

Axel Gloger is Chairman of the think tank Trendintelligence, a company that deliv-ers future strategies for businesses. He serves as a board member of various lead-ing service companies. His major contribution in this role is his expertise in strategy and his ability to bring up the questions nobody else asks. He is the author of many hands-on books, and he is the founder of the blog www.ueber-morgen.net. Axel Gloger studied economics at the universities of Bonn, Freiburg im Breisgau, and Co-logne. Later on, he upgraded his set of strategic skills at Insead (Fontainebleau) and ESMT (Berlin). He lives with his family in the Rhine area. axel[at]gloger.biz

REFERENCES

► Deskwanted.com (Eds.) (2013). Global Coworking Census 2013. 2498 coworking spaces in 80 countries. Berlin.

► Drucker, P. F. (1985). Managing in turbulent Times. New York: Harper & Row. ► Gloger, A. (2012). Über_Morgen. Was Ihr Unternehmen in Zukunft erfolgreich macht. Wien: Linde. ► Plöger, P. (2010). Arbeitssammler, Jobnomaden und Berufsautisten. Viel gelernt und nichts ge-

wonnen. Das Paradox der neuen Arbeitswelt. München: Carl Hanser Verlag. ► Tapscott, D., Williams, A. (2006). Wikinomics. How Mass Collaboration changes everything. Lon-

don: Portfolio.

INTERNET LINKS

► Betahaus (Berlin, Germany) www.betahaus.com/berlin ► Burooz (Brussels, Belgium) www.burooz.be ► Citizen Space (San Francisco, USA) www.citizenspace.us ► Club Workspace (London, UK) http://club.workspacegroup.co.uk ► Combinat 56 (Munich, Germany) www.combinat56.de ► Hutfabrik (Vienna, Austria) www.hutfabrik.com ► Mobilesuite (Berlin, Germany) www.mobilesuite.de ► Mutinerie (Paris, France) www.mutinerie.org ► The Hub (Zurich, Switzerland) www.hubzurich.org

But despite all the excitement, there are also setbacks in the co-working indus-try, as the market leader in Berlin discov-ered in 2013. Betahaus could not rep-licate its success in other locations. Its Cologne co-working space closed down in mid-April 2013, and the Hamburg office went bankrupt at the beginning of sum-mer. The reason: not enough tenants. It seems like not every city has the same potential for this innovative concept. Also other co-working-space related projects

had to shut down, like the industry portals deskwanted.com and Hallenprojekt.de. Co-working may have the wind in its sails, but it is the rules of the market economy that count. Competition is tough, and not every location is automatically going to be a success. In particular for mediocre providers whose ideas, location, pricing, and service do not add up, there is only one path – the market will soon weed them out.

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