It’s the Company, Stupid

🏡 What does 2023 have in store for the housing market? I chatted with Megan Eales Monroe on AppFolio's Top Floor podcast. Megan and the team did a great job editing and adding context to my comments. Listen or read the transcript here.

🗽 How to revive our cities? They are currently struggling with half-empty offices, deteriorating infrastructure, and budget shortfalls. We have a unique opportunity to rethink land use, tax, and environmental policies. What does this mean in practice? Join me for a live conversation with Brookings' Tracy Hadden Loh. Sign up for free here.

📚 Looking for a good book? Premium subscribers can access Part 1 and Part 2 of books to read in 2023, with recommendations, summaries, quotes, and discussion of key ideas. Part 3 comes out next week.

🚧 Can Offices become housing? The recording of my live conversation with Steven Painter has already been viewed/heard by 10,000 people, with nearly 50,000 more who read about it on my various posts. I am looking for corporate sponsors to help produce more live conversations of this kind. Please get in touch with Raleigh if this is of interest (or email me back, and I'll connect you directly).

🎧 The audio version of this article is available below and on Spotify, Apple Podcasts, and beyond.

There are two kinds of bosses: Those who embrace flexibility, and those who are about to lose their job.

The conversation around remote work is framed as a struggle between managers and employees. A recent article from the Wall Street Journal declared that "The Bosses are Back in Charge" due to recent tech layoffs. Employees are allegedly rushing back to work and are doing as they are told. Bosses and landlords are celebrating the fact that — 3 years after the pandemic began — office occupancy finally edged above 50%.

But bosses vs. employees is the wrong narrative. The real drive for more flexibility comes from companies themselves and, more broadly, from the changing nature of capitalism. Some bosses get it, and some bosses don't, but the simple reality is that it is no longer possible to plan your workforce and office needs too far in advance.

Consider Elon Musk. People like to point out that he insists all employees “spend a minimum of 40 hours in the office per week.” But, at the same time, Musk also reduced Twitter's full-time headcount by 75% and currently relies on "several thousand contractors." He's not alone. Companies like Microsoft and Apple are hiring employees in more locations and relying more heavily on on-demand, contract, and part-time employees. The larger the company and the more competitive the industry, the more likely it is to rely more heavily on flexible and remote employees — in percentage and absolute terms.

This trend will intensify as the economy becomes more creative and more dependent on network effects. Instead of corporations with clear structure and hierarchy, we'll see networks of craftsmen and financiers that coalesce and disperse to get things done — just like in Hollywood.

Our offices and cities will have to adapt to this mode of production. Instead of one-size-fits-all designs and long leases, workspaces will have to become networks of specialized and flexible spaces. Meanwhile, employees are still choosing to quit at elevated rates — undermining the narrative that "bosses are back in charge."

Bosses who think they're in a struggle against employees are missing a much bigger struggle: the struggle against rising uncertainty. Hollywood deals with this challenge by embracing flexibility and bending over backward to attract top talent. Your job is to figure out how to do the same in your own industry, not to figure out how to turn the clock back to 2019. Step up or step down.

Have a wonderful weekend.