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Executive Suite Innovation - No Turning Back

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WSJ.com May 16, 2010 - The recession forced many chief executives to find new ways to run their business—and many are relying on those changes to help fuel growth and cost savings in the recovery.

During the slump, Regus PLC, a provider of outsourced office space, launched more lower-priced services after customers cut spending. A Bayer AG division sought new business in alternative energy when its traditional car and construction markets dried up. Duke Energy Corp. solicited employee ideas for cost cuts when demand for energy fell.

Now, all of those initiatives are outlasting the recession, executives say. "They're not going back to the old way," says Harold Sirkin, a senior partner at Boston Consulting Group.

Regus, which has over 400 locations in the U.S. and others in Europe, hoped at the beginning of the recession that corporate clients would use more of its office space and video-conferencing facilities as firms slashed travel budgets and downsized their own offices.

But that strategy didn't pan out. Corporate clients did cut travel budgets—but they cut back on use of Regus's space too.

The company ran focus groups to discover clients' concerns, something they didn't do very often before the recession, according to CEO Mark Dixon.

Focus groups said they wanted more office-use options at a broader range of prices, especially on the lower end, which Mr. Dixon also thought would attract small businesses and individual consultants.

He introduced a five-day card for $69 that gives users a desk at any Regus shared-workspace location. Regus also introduced a plan for $25 a month that gives people access to any "business lounge," an open space with wireless access at a Regus business center. Before the recession Regus didn't offer anything comparable, and customers could use private rooms on an hourly basis or for $75 a day.

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As the worldwide leader in Flexible Workplace / Executive Suite industry, Regus's initiatives have changed the industry requiring those who want to be competitive to change, too. Once of the biggest changes has been in the offering of virtual offices. It has been a rob Peter to pay Paul scenario since many of the virtual office clients at one point would have had full time offices paying much more in rent.  With the recession many factors changed and it appears that business is not going to go back to the way it was before the recession.

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2 responses to “Executive Suite Innovation - No Turning Back”

  1. Atlanta Office Space Says:
    Executive Suites are a great product that has been a great solution for many companies for our clients looking for office space in Atlanta and other markets. Their services and product has become very flexible to accommodate a tenants need.
  2. DavidLeeman Says:
    Very Informative post! Apparently unprecedented market conditions require a completely new mindset and approach to run a business. We need to work out what it was about your leadership style that made us a great leader in the good times, as that is what we need to focus on the critical period. Innovative method of accomplishing a work is always welcome in the period to reduce the process cost.