Published Thursday 19th December
Many aspects of business have changed over the course of this decade. Yet, if one thing has had the most impact on our lives, it is the rise and resulting reliance on digital technology. In the modern world, various digital technologies play a crucial role in our daily activities, from home to work. New technological trends are already shaping supply chains, while the value of new technology continues to skyrocket.
However, in October, the business world was given something of a warning regarding its current obsession with technology, and the convenience it often provides. In September, American company WeWork was preparing to list itself on the stock market with a potential valuation of over £37bn. One month later, the company was worth less then £8bn, saved by its investors with its founder ousted. It’s a dramatic story that has already spawned talks of a movie in the future. However, as we enter an increasingly digital age, it also presents a note of caution regarding its rapid rise.
What Happened at WeWork?
WeWork was founded in 2010, offering a range of flexible office spaces in some of the world’s biggest cities. With communal and private office spaces available with flexible terms and a variety of perks, it is a particularly appealing proposition for millennials, offering a more energetic and social alternative to traditional office spaces.
Fueled by investments from some of America’s biggest names, including Goldman Sachs and JPMorgan, WeWork has expanded at an incredible rate. The business now also offers living accommodations (WeLive) as it establishes itself as the latest technological disruptor to developed markets in the same mould as companies like Uber.
This incredible momentum saw it become the US’s most valuable private company, leading to an inevitable stock market flotation. Then, as public investors began to line up, preparing for the latest big technological success, the question was asked: is this digital?
WeWork had expanded and grown thanks to the energy of its co-founder and public face, Adam Neumann, who once called it “the largest physical social network in the world.” The short-term nature of many of its ‘memberships’ and its appeal to self-employed people operating in the digital world made investors view WeWork as a digital company. Behind all the colour and energy, though, people started to see the business as a simple offerer of office spaces. We Work wasn’t digital at all – it was merely a real estate developer operating under the guise of a digital startup.
Questions began to pile up, leading to the flotation of WeWork being delayed less than a week before launch. Admiration for their incredible expansion turned into concern regarding its operating losses. Soon, the multi-billion pound dream turned into an administrative nightmare as the entire business ethos was called into doubt. WeWork is currently in a state of refinancing, as the business almost ran out of cash entirely. The ensuing crisis management has resulted in the ousting of Mr Neumann by now-controlling shareholders SoftBank.
Lessons to Be Learned from WeWork
It should be stressed that the situation with WeWork was entirely of their own making. It was also a rather extreme scenario, where a business’ entire ethos was deemed incorrect for what it was offering. However, the response from knowledgeable business personnel before and after the events of the stock flotation do point towards a growing desire for commercial digital technologies. It is also worth noting that investors are continuing to provide capital for WeWork’s growth, but with a much clearer picture as to the company’s potential.
In an increasingly digital world, business leaders can sometimes be too keen to place over-reliance on upcoming technologies, losing focus on what has produced results in the past. Yes, new technologies are incredibly important and can provide the competitive edge required to succeed. However, the fundamentals of your business, the key drivers and targets that have got you to this current position must never be forgotten.
Here at Expense Reduction Analysts, we’ve been fortunate to work with major businesses across the UK in helping refine modern procurement strategies. Our cost reduction consultants have years of experience across a range of industries and can help to save you money by streamlining your current supply chain practices. If you’re interested in modernising your existing business procedures heading into 2020 and beyond, why not get in contact with our team today? Alternatively, browse our case studies to see the work we have already successfully carried out for a range of companies.