Is rebranding all activities under the “We” umbrella the right decision?

What are the

pros and cons?

Rebranding everything under the “We” umbrella is not the right move for WeWork

especially when they are facing increasing cost everywhere throughout their operations and

do not have enough capital to fund more activities to continue to grow. Although it is their

company strategy to provide the “we” experience to more than people who use their office

space it is not the move for them to expand into other segments when they are facing

enormous amounts of operating cost. If you look at the financial information provided from

the case, you can see that that their operating cost increased to 3.8 billion dollars while their

revenues had only increased to 1.8 billion dollars in a single year. This type of operation

cannot last forever, and it is seen by investors as a risk for them. For example, in the case it

is discussed that WeWorks’s biggest investor Softbank, was preparing to buy 16 billion

dollars of shares of the company in 2018 but ended up backing out of the deal and only

purchased an additional 2 billion dollars more of shares when they had already owned 8

billion. One would wonder why Softbanks would back out of a deal when WeWork is

increasing its revenues, and that is because all other operating costs are also increasing much

more rapidly.

There are both pros and cons to having everything rebranded under the “We”

umbrella. The biggest pro of putting everything under one organization is that there is one

goal set for the whole organization. This allows all branches of the company to be under one

purpose and mission statement that can drive them to succeed. WeWork’s mission is to

provide people with better service than competitors and have people enjoy what they are

doing even if they are working. If this is their mission for everything than they will always

attract more customers to their business. The con of this is that WeWork might lose its
identity through its expansion into other segments. Although it is considered to be a real

estate company that provides freelancers the opportunity to have office space without having

to deal with any of the hassles that come with them having to purchase or rent out their own

office suite, it is more of a service or experience provider. WeWork is more of an experience

or service provider because they are providing a certain working environment for their

customers and that is one that makes everything much more pleasing for them to be there.

They have built a reputation of meeting curtain standards to their customers and people

expect them to always meet the standards. By them expanding into other segments such as

WeBank they are entering markets they have none to very little experience thus not allowing

them to provide a good service. Along with this they have studied their core customers and

understand what they want, so they cater to them much more effectively. Having to enter a

new market, they would have to gain new knowledge about that market so they could

effectively serve their new customers. It is not ideal for a company who is already facing

huge losses, to continue to expand in size but also try to enter areas it has no experience in.

This inexperience might lead them to inaccurately serve their new market but as well affect

how they serve their current customer base, thus driving them into more loss of revenue.

By branding everything under the “We” umbrella they could also face funding issues

to get other We companies going. As mentioned in the case their investor Softbanks opted out

of investing more money into the company because they probably performed a SWOT

analysis on WeWorks and also probably reviewed the financial statements to conclude they

should not be investing so into the company. WeWork is failing to generate sufficient

revenue to keep up with cost. This causes potential investors to thoroughly think about,

whether to invest in them or not. Another potential pro would be that since they are

expanding more into the real estate business such as there WeLive and WeSleep they already

have some information and experience on how to serve people. For example, a New York
Times Journalist said he was more productive as well as less unmoored while he used

WeWorks service to provide him with an office. This is done to WeWorks providing many

amenities to its customers so that they can enjoy being at work such as a common area,

alcohol, activities such as ping pong and much more to provide an environment that people

enjoy and look forward. They are able to achieve this because they understand who their

customers are and use the information, they have to create office spaces that people enjoy

using. They could do the same by expanding into areas of hotel service and provide people an

enjoyable hotel service. There could be a potential issue, and that’s there is a lot of

competition in the hotel service already so they will have to find a way to stand out more than

the competitors while still remain cost effective. WeWorks is trying to to expand at a very

fast rate with hopes of driving out their competition but this type of business model is only

sustainable for so long because of the increasing operating cost.

Can WeWork continue to serve its diverse community of members as effectively under
the new organization?

SWOT Analysis

Strengths Weaknesses
● Convenience & flexibility ● Inconsistent revenue
● Lease flexibility ● Highly expenses
● Networking ● Flexible contract
● Data-driven
● The power of community

Opportunities Threats
● Have many partnerships ● Shift in market trend
● Technology ● Economic slowdown
● expand to different markets

According to the SWOT analysis, it represents that WeWork’s strengths are to

provide the conventional work culture to its customers, which make them become more

energetic and appealing, especially among millennials. WeWork’s customers are flexible as
they can choose where they want to work. Moreover, using data that is collected from

customers allows the company to create and design optimal workplace for companies.

Nevertheless, WeWork’s weaknesses are fluctuating revenue, high expenses, and flexible

contract. According to the article “WeWork’s $47 Billion Dream: The Lavishly Funded

Startup That Could Disrupt Commercial Real Estate”, the author mentioned that WeWork

offers its customers with short- term contract. Thus, it can affect the long-term profitability of

its business as its income is vary. After adding amenities, WeWork can offer service to its

customers through partnership such as, 2U, SoFi, Meetup, and Techstar. Also, technologies

would enable WeWork to connect members and to become more convenient for customers to

use its app. However, if an economic turns down, it would have a huge negative impact on

WeWork. Because the company has signed a long-term contract with landlord 15 - 20 years,

the company needs to pay to the landlords even though during the economic downturn or

shift in market trends in the future.

WeWork rebranded itself to become “The We company”, which consists of three

main business lines: WeWork (for coworking office spaces), WeLive (for co-living space),

and WeGrow (for education). Although the company is still keeping its core business and

main service offerings; however, under this changing, WeWork would not be able to continue

to serve its diverse community of members effectively. WeWork may face some negative

effects due to the following concerns:

While WeWork is expanding rapidly, and not everyone would enjoy the experience of

sharing space. WeWork may not be a suitable place for everyone as it has too many clients.

WeWork’s employees who account for the members would be not enough. Moreover, there

are too many small companies and freelancers sharing the co-working space, which

sometimes causes problems like noisiness and congestion. In the case, Jean Tang, copywriter

of company Marketsmiths, complained about noise and overcrowded space. This may not be
the result that the company expects, as they actually want to nurture their own culture and

minimize distractions to help their employees produce their best work.

In addition, WeWork provides a flexible contract for the tenant, which would be a risk

for the company regarding uncertainty over revenues. The tenants can choose upgrade and

downgrade the contract. Once a user of WeWork’s service feels uncomfortable, or they find

another place with lower rent obligations and are able to provide a similar offering for less

money to the customer, a tenant may end their lease with the company.

Moreover, WeWork has exposed too much in real estate. In 2018, the company

invested large amounts in expanding WeWork global operations; 425 buildings were opened

for fewer than 18 months. However, the company does not generate much revenues. WeWork

lost $1.6 billion on $1.8 billion in revenue. In this scenario, WeWork needs to be able to find

a balance between the revenue and the new business offering in order to secure profitability.

WeWork may decide to cut down in some areas to decrease expenses. For example, WeWork

may come up with the solution to lay off employees.

This case has three main themes: business model innovation, customer-centricity in a

service context, and the development of a growth strategy and execution all of which

entail a lot of risk. How important is data and analytics when optimizing the customer

experience? What data could you use and why?

Endeavors such as Business model innovation, customer-centricity in a service

context, and the development of a growth strategy all entail huge risks for a company. For

this reason, it is crucial that the decision-makers are guided by the right amount of

information. Data and analytics can be a precious tool to reduce those risks.
 We are going to look at how important data and analytics are when optimizing the

customer experience, which lead to the company’s growth. By doing this we are able to

determine which type of data WeWork could use and why.

In the service industry, customer-centricity is a key element of success. In order to

achieve that, companies must continuously learn new information concerning their customer

to better satisfy them. This is where data collection and analysis can be a precious tool, and if

used correctly, it can completely change the future of the company.

Nowadays, data is collected in two ways, explicitly by asking the targeted population

in the context of a survey approach, or implicitly, without clearly warning the targeted

population that data is being collected about them. The emergence of the later, was recently

realized during Marc Zuckerberg’s trial in April 2018, has propelled Data as the most

valuable resource on earth. As a matter of fact, according to a The Economist article

published in May 2017 “The world’s most valuable resource is no longer oil, but data”.

This is how important data and analysis is, not only when it comes to optimizing the

customer experience but rather optimizing the entire company’s way of doing business.

The recent progress in machine learning could help WeWork improve their office

design, this technology was proven to be 40% more accurate in estimating room usage than

WeWork’s own designer. This could be combined with more standard methods such as

survey research disguised as “Tell us about your business and your people, and we’ll design a

workspace to support your goals”. This data collection could be incorporated into the

company’s growth strategy by helping WeWork develop a competitive advantage over their

competition by providing the most relevant and customer-needs aligned offices on the

market.

Technology is allowing us to measure data in a way we never thought possible, in the

case of WeWork offices, the focus lies on employees’ behavior within the work space which
is directly linked to the interests of managers. Finding ways to satisfy the wants and needs of

management is crucial for the company as they are the decision-makers when it comes to

choosing WeWork’s services for their base of operations.

CB Insights states in its report “Sensors and other measurement tools like facial

recognition software track how its office space is used, down to data as granular as how

members adjust their desks, what parts of the office see the highest foot traffic, and

eventually, maybe even how focused members are in meetings”, these are all very advanced

sensors that could provide employers crucial data to improve their company’s productivity. In

this case data collection can be used as a service that could be incorporated into WeWork’s

new business model.

This tells us how data collection could be used in two ways, the first one would be by

helping WeWork design their workspaces and services to better satisfy their potential

customers and gain market shares. But there is also a second application, like stated in the

previous example, those sensors could be provided to employers as a lucrative service that

would help them monitor and oversee the behavior of their employees.

However, this kind of data collection poses a serious moral and ethical dilemma,

employees could find this degree of surveillance invasive, causing tension within the

company and hostility towards WeWork. Scenarios such as Labor Union suing WeWork for

invasion of privacy could be extremely detrimental for the company. Employees themselves

might be repelled by such practices.

To conclude, balance must be found to maximize profit while minimizing the risks of

invasive practices, if such balance is found, WeWork’s decision makers will be able to safely

guide their company into a brighter future.

The WeWork Report. (2019, January 31). Retrieved November 16, 2019, from

https://www.cbinsights.com/research/report/wework-strategy-teardown/#strategy.