BP boss Looney predicts a world where offices are no longer crucial
Reinvention, reorganisation, and now reconfiguration. Bernard Looney’s “reimagination” of BP has settled on a very definite theme. There are even 10,000 redundancies to really hammer home the point. But here’s a new one from the new boss: remote working. The oil giant is reportedly drawing up a plan that could see as many as 50,000 employees adopting a sort-of hybrid approach that combines working from home with office-based hot-desking. That’s almost three quarters of its workforce.
According to The Guardian, the review is likely to stop short of a 75pc reduction in office space. However, the final cutback could still result in its footprint reduced by half. The implications of a company like BP downsizing in such an extreme way are clearly massive.
The property industry is desperately playing down the working from home experiment, insisting that it is temporary. “The office is far from dead,” protested Derwent London boss Paul Williams this week despite occupation levels across the firm’s London office blocks running at just 15pc. Williams predicts it will be back up to 50pc by the end of the year, and improve further in 2021, but that is nothing more than a guess and a hugely optimistic one at best.
Landlords are betting, or perhaps praying, that people will eventually head back to the office either willingly or because employers have ordered them back.
This is wishful thinking. Life has changed, almost certainly permanently. Any chief executive with an ounce of sense will realise that the world has just vanished from under their feet, which means making some bold calls now.
Barclays boss Jes Staley was already declaring large corporate headquarters dead back in April, saying they are “a thing of the past,” after realising that the vast majority of the bank’s 80,000 staff could work from home with little impact on day-to-day operations. RBS has ordered 50,000 staff to work from home until at least 2021. It is a scene that is being replayed across the corporate landscape. Anecdotally, big companies are talking about reducing their footprint by between 30pc and 40pc on average.
It’s not just the practicalities of having large numbers of people in one place from now on. This is a once-in-several-generations opportunity to take an axe to the cost base like never before. Looney is calling this BP’s “biggest reorganisation in over a century”, and although he’s talking primarily about his attempts to move away from fossil fuels, any proper corporate modernisation must now consider the impact of the pandemic, together with new technology, on working arrangements.
That inevitably means reining in sprawling global empires with acres of dead floor space. BP has offices in nearly 80 countries and Looney has claimed (naturally via LinkedIn) that the company is at a “digital inflection point”, a warning, it would seem, that sweeping change is around the corner.
The implications are obviously huge for property developers but the bigger concern is what it means for our cities, the businesses that depend on office workers for their livelihoods, and public transport. For business districts dominated by high-rise tower blocks, like the City and Canary Wharf, the ramifications could be disastrous.
Curtain falls on another film titan
So long to Sumner Redstone, titan of the film industry, who has gone to join the great movietheatre in the sky.
Redstone was a Hollywood colossus who turned his father’s provincial drive-in cinema chain into a global entertainment empire that included Paramount Pictures, CBS, Viacom and MTV. The billionaire was famously ill-tempered and led a colourful personal life even in old age, which would have made for the most gripping of soap operas.
But he will be remembered as a true industry pioneer. His prediction that “content is king” proved to be brilliantly prophetic, even if it was a development that has accelerated the demise of the traditional media houses.
Moguls like Redstone, Rupert Murdoch and Silvio Berlusconi have found themselves surpassed by a new generation of upstarts from Silicon Valley as the internet has completely changed the way we consume entertainment.
Consumers are now able to watch what they want, when they want, and on any device, leaving a new school of tech titans such as Reed Hastings at Netflix, Amazon’s Jeff Bezos, Google boss Sundar Pichai, Tim Cook at Apple and even Alibaba founder Jack Ma to battle for supremacy.
People may have feared the likes of Redstone and the power the old guard wielded but they were almost feeble when compared against the new tech aristocracy.