The idea of a virtual franchise seems more obvious now than in 2015. Back then, US-based Fractured Prune Doughnuts had over 20 franchisees and yet, they had grown and operated without ever using a physical office or having a corporate headquarters. CEO Dan Brinton called his 'corporate headquarters' wherever he needed to be for business, preferring to assist people and stores hands-on rather than spending time in an office.
Fast forward to today, Brinton's view of company headquarters rings truer than ever as the majority of rules and mindsets on workplace culture have changed due to COVID-19. As a significant percentage of the workforce continues to work remotely, headquarters might well soon be a thing of the past.
While it has been viewed as a symbol of an organisation's growth, stability and success, big head offices are starting to lose their power and image, now that people are not solely working from home – they can be working from anywhere.
The impact of this trend extends beyond merely giving people the flexibility in their work locations and set-ups, but in the cultural diversity it brings for the business – the nuances, cultures, practices, and differences among people, which we may have not realised if we centralise everything in an office headquarters.
So, the question for leaders now is: how important are those corporate headquarters after all?
Is business now more global or local?
The answer is both. Decentralised businesses that operate in different states and countries are more attractive and appealing globally, which makes the question: "Where are your headquarters located?" less relevant and raises the new and more relevant question: "Where else are you located?"
But breaking down the walls of head offices will require digging, adapting, and a great deal of learning to gain solid ground in other locations. Companies need to ask themselves if their leaders are able to successfully navigate today's rapidly changing and globally connected world.
Increasingly, we are seeing the demand for more leaders with the unique skillset necessary for global leadership success – which not only includes talent and expertise, but cultural competency. Those leaders who have local knowledge and in-depth understanding of local culture will almost always be the better person for the job.
John Pepper, one of Procter & Gamble's leaders who helped take the company global in the 80s and 90s, would visit five local households when he travelled to a new country to learn how families in that country "wash their clothes, clean their house and look after their children's hygiene". This attention to local detail was credited as part of the company's spirit of inquisitiveness, which led to its global success.
From HQs to hubs: how much space do we need?
Two of the many things that COVID-19 made us realise was how many organisations were in fact ripe and ready for working from home. The question that many businesses are pondering right now is how much space do we really need and for what purpose?
Now that we've realised a good percentage of the workforce can work anywhere, the purpose of offices is starting to change, and headquarters are no longer the 'norm'. Instead, businesses can create and provide hubs and spaces that will enable their employees to do and build the things that can't be accomplished virtually.
In September 2020, just months after the pandemic started, Recreational Equipment Inc (REI) sold its eight-acre and newly built head office in Washington's Bellevue to Facebook in response to the situation. In the following year, they moved to their first satellite office, which only caters for 400 people, where their staff can enjoy the hiking trails, lakes and parks nearby when they visit.
However, reimagining the office space is not purely limited to enabling people to work remotely, it's also about providing them with an environment conducive to being more productive. For example, working from home can be a challenge in countries like Hong Kong, where homes can be tight in space and often with multigenerational people in one household. In locations such as these, offices will now have a more profound purpose for businesses, and should be designed accordingly to improve their employees' productivity and well-being.
Leveraging personal and cultural differences
Ditching headquarters and expanding businesses in broader areas and locations will not only make it more diverse, it will become even more innovative. If we limit ourselves to one location, we might be missing out on the strengths of talent across the world.
The leaders of the future will know how to leverage personal as well as cultural differences to gain trust and build collaborative relationships. As companies integrate into global operations, it will be crucial for leaders to keep evolving and mastering the attributes needed to navigate the complexities and challenges unique to globalisation.
According to a Gallup study, while 48 per cent of organisations consider developing global capabilities in their leaders to be a top priority, only 18 per cent of multinational companies have the pipeline of leaders necessary to meet future business challenges.
Tomorrow's successful companies are those that are supporting managers to be global leaders today. They cultivate a global perspective where the best people from around the planet can form part of the team developing solutions which are not one-size-fits-all, but which will reflect all.
Perhaps in the future, corporate headquarters will no longer be slick, sophisticated physical offices housing companies' executives and leaders. They will be defined by their leaders and their people – wherever they are in the world.
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