Let’s Get Phygital!!! Phygital…

As a 2 year old outsourcing startup that services SMB back office operations for the likes of established firms and new economy businesses, PARR is often faced with difficult decisions about how to find and use facilities to better serve clients.  For all of the firm’s collective experience in complex transactions and professional service delivery, finding the right facility and long-term office arrangements has proven to be one of the company’s hardest challenges.

Given the emergence of the digital economy, real estate choices have grown for all firms.  But the volume of options can predictably lead to some paralysis.  Throughout the search for the ideal facility, Parr faced the constant dilemma of finding the right balance of a functional and attractive physical space with the needs of a flexible, modern and scalable technological infrastructure.

Maybe the whole episode would have been easier if the company learned early on that there was a name for this trend – “Phygital”.   Where have we heard that word before?

One Chicago firm describes the development as applied to commercial real estate:

The “phygital” trend – the blending of physical and digital commerce – continues to redefine the commercial real estate industry. Retailers such as Home Depot and Paypal, Foursquare and Walgreens, and Amazon are exploring ways to bridge the phygital divide. Tools and apps like QR codes and Belly bring the mobile world into the physical consumer experience. The use of social media among landlords is increasing, while traditional office spaces redefine their use as incubators for the next generation of internet giants.

We’ve known about the ongoing convergence (or collision, if you will) of the bricks and mortar world with the digital world for some time, but it was never so clear that the phygital trend has application to the process of site selection that small- and mid-sized businesses (SMBs) struggle with today.

Site selection is a well-established field (actually it’s a conglomeration of many disciplines) that engages some real-estate professionals full-time, and is important enough globally to draw the devoted attention of multinational firms that track the industry on a much larger international scale.  Real estate expertise is so valuable that you can find experts to guide your company’s site selection process within a 5 block radius or a 5 continent radius.  Don’t expect a glossy insert or double-sided brochure to convey the importance of these issues.  This stuff is the subject of white papers, full-blown analytics platforms, and dedicated site selection specialists, all of which cater to both supplier and buyer segments.  Global consulting giant KPMG has a whole vertical devoted to this area with its own brand identity under the Competitive Alternatives moniker.

In some ways the intertwined macro/micro views are like the yin and yang of the commercial real estate market – each exists in its own space, but is integrally bound with the forces of the other.  Despite having a principal with significant experience as a development specialist, Parr experienced first-hand the difficulty of applying that specialized academic and professional knowledge to its own operations, particularly in a quickly evolving local urban realty market like Chicago.

As they do for many SMB firms, the significant capital costs and onerous restrictions of long-term commitments common to commercial leases have proven to be a barrier to setting up shop in a permanent home for Parr.  Some professionals remind us that office costs are probably the second largest expense for most companies behind personnel and labor expenses, and other forms of human capital.  No wonder that it’s tough to pull the trigger on such a significant capital investment when firms are trying their best to remain capital lean. 

Can companies ever commit to a home when they covet their mobility?  This fear of commitment sounds a lot like a bachelor’s restlessness to maintain freedom at all costs.  I guess corporations really are people too, right?

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LEXECON 1 – Invest in Plastics: Chicago’s Bucket Boys

Photo: LensImpressions.net

From an early age I was always interested in business, and was the only kid in my grade school who regularly read the “Business” Section of the local paper, and who considered it normal to read publications like “Business Week” and “Forbes” from cover to cover.  Growing up in a family of teachers, it’s no surprise that I’ve always been an avid student of many things.  Though I’ve studied business for most of my life in some form or another (including college and graduate work), it didn’t come naturally to me.  Passing the two decade mark since my first formal education as a B-School undergrad, it’s intriguing to learn valuable lessons in business practically every day, whether they come from high-minded academic sources or even from simple observations on the street.

Invest in Plastics – Chicago’s Bucket Boys

Spring announced its arrival this week in Chicago with unseasonably warm weather, but one of the most familiar signs to locals of the change of seasons is the clatter of complex beats tapped out on plastic utility buckets cutting through the urban noise and congestion of city traffic and pedestrian mobs.  After your ears adjust to the high-pitched rattle and you get over the impulse to ask whether these drumming youngsters should be in school or somewhere other than Chicago’s famous boulevards (maybe like here), you begin to appreciate that there’s more to your typical bucket drummer corps than raw rhythmic talent – these kids can be pretty savvy.   Don’t be fooled into lumping them in with the average panhandler (a topic for another day).  The “Bucket Boys”, as they are known to some Chicagoans, are smart, and they’re about business.  The once underground phenomenon has become so prevalent in some areas that many cities are trying to bring these performers out of the shadow economy with licenses and permits.

At the end of one of last year’s Taste of Chicago events, I walked out of Grant Park with thousands of others right back past the spot where one group of bucket drummers had been performing earlier near Michigan Avenue.  I could tell from before that they could play and knew how to work the crowd to earn a fair amount of tip money.  Their chants and songs were cheeky, yet effective, but they knew their performance cues as well as the most polished professional musicians.  As they were breaking down, I stopped in my tracks shocked at what I saw.  One kid, who I’d recognized earlier as a skilled drummer and a leader of sorts, had begun counting the day’s take and handing out shares.  He broke up the money for distribution.  I could see there was some hierarchy in effect, which meant the shares weren’t completely equal, but no one in his crew questioned their take or his authority.

What impressed me more was the fact that he when he couldn’t get them to lug away their buckets and sticks after finishing, he struck up a conversation with some other kids, and just a few moments later…he had sold all of their equipment to some complete strangers, who were determined to have their own try at earning a few dollars from the departing crowds.

As the new entrants to street entertainment began to take up their places for the evening set, the head of the original group laughed aloud as he counted his money.   I couldn’t tell if he had improvised it, or if that was part of his usual business model (“get in, get paid, get out”), but I’d never seen such a clean business operation and well-executed exit strategy as these.   I didn’t bother to hang around for amateur hour, I had already seen the pro at work.

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