13.A Gensler publication

Talking about...Work and the Workplace

THE IMPACT OF A GLOBAL WORKFORCETHE OFFICE & BUSINESS PERFORMANCEDESIGNING FOR CREATIVITYORGANIZING FOR INNOVATION

Work & the Workplace in 2006

The Office & Business Performance

Designing for Creativity

Organizing for Innovation

ROUNDTABLE WHEN WORK SPREADS OUT

CASE STUDY HERMAN MILLER

INSIGHT EMBRACING UNCERTAINTY

NEWS & VIEWS

DESIGNER’S NOTEBOOK

When work and the workforce are truly global, what does this imply for the workplace?

This is a question that a lot of companies are pondering. Here’s our take.

Work’s new how is addressed by the performance poten-tial of the office workplace. As two recent Gensler surveys found, people see a strong connection between well-designed work settings, their own productivity, and their company’s performance.

Work’s new why is innovation, which the workplace helps speed along. Especially now, when creative teams are often collaborating from different time zones, office set-tings let people talk face-to-face, learn from each other, and feel part of a community.

In short, as work spreads out, the workplace matters even more.

2

John Seely Brown

12

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32Cover Cooley Godward, LLP, San Francisco

dialogue 13 Workplace

Work & the Workplace in 2006It’s a paradox. The world goes wireless, but the workplace still matters. Why? When you’re hungry for ideas, face-time with your network is how you get them. B Y A N D R E W B L U M

dialogue 13 Workplace

Given a cell phone and a WiFi card, the virtual workspace of the future seems to be already here. Yet from a human stand-point, we’re rooted in the past. Just as we all link up wirelessly, we realize that interacting face-to-face may be where the true value lies.

Business drivers like mergers and acquisitions, out-

sourcing, and offshoring are spreading out the work-

force and work processes. Teams draw on people

from all over, even from other companies. Yet they

still have to work together to generate new ideas.

Businesses are under greater pressure to innovate,

and fast. So, the workplace’s ability to support the ac-

tivities that lead to innovation has moved way up the

list. For global companies, this means providing the

infrastructure that enables global teams to collabo-

rate effectively across borders, time zones, and with

outsiders.

Conversations with Gensler’s workplace practice

leaders and others make it clear that we’re in a new

era of distributed work. Given the demands that are

placed on it today, the workplace is becoming a se-

ries of connected settings that support each person’s

workday while keeping him or her linked up with

others across a larger social network.

The paradox of global work

As the geographer David Harvey observed, the con-

nectedness that is often a hallmark of global firms—

frequent travel back-and-forth and virtual communi-

cation among teams to reduce the apparent distance

among work settings—heightens their differences.

Moving from region to region in a multinational

company, you notice how nuances of local laws, lan-

guages, and traditions shape and influence the cor-

porate brand and culture.

As technology shrinks distance, these differences

persist and are even amplified. To mitigate the re-

sulting polarization, global businesses prefer “world

cities” as locations. These cosmopolitan centers, ex-

isting and new, mediate between a global culture and

the flavors of each locality. Differences are celebrated

and put to work.

The workplace is gaining a similar sophistication.

People want options, including the choice to be with

others whose skills, knowledge, and creativity are

crucial to what they have to do. “People come

together because they want to and because it’s im-

portant to do so,” says Gensler’s Jim Williamson.

“The workplace is a stage on which key interactions

take place.”

Overleaf: Right Management, Amsterdam; left: Doblin Inc.,

Chicago; above from left: Nihon L’Oréal, Tokyo; Baker Botts,

London; Absolut, New York City

dialogue 13 Workplace

people to share thoughts and ideas as they’re being

developed.” The best ones also let people unplug and

work on their own, without distraction. That’s just

as important to creative work.

“My clients—in the financial sector, not just in ad-

vertising or entertainment—are asking how they can

create a sense of energy,” says Gensler Los Angeles’

Nila Leiserowitz. “At the same time, they realize that

one person’s knowledge-sharing is another’s noise.

The iPod may be our era’s closed office door—how

we signal to others not to interrupt us.”

Talent and the workplace

No one expects to spend a lifetime working for one

company anymore, but that only makes the competi-

tion for employees’ hearts and minds more intense.

Companies are looking for a virtuous cycle: people’s

sense of belonging helps retention; retention aids

mentoring; mentoring builds expertise across the

company; and that expertise fuels innovation. With

a dispersed workforce, the office is the main place

where this happens.

As Ernst & Young’s Michael Buckley points out, that

sense of belonging is strongly reinforced by where

a company decides to locate its offices. An industry

sector like banking and finance, for example, will

choose Manhattan so its leaders and traders can

rub elbows. Their presence draws the young and

ambitious, who are also attracted by the city’s ameni-

ties—some of which suburban office parks now try

to replicate.

Writing recently in The New York Times, Paul Krug-

man speculated that Manhattan’s renewed populari-

ty as a headquarters city is made possible by tech-

nology, which has allowed these companies to shift

their back-office functions to lower-cost locations.

Wherever they choose to be, though, the workplace

retains its importance. Says Mark Nicholls, head of

corporate real estate at Bank of America, “Looking

ahead, global companies will be competing hard

for talent. A high-performance workplace will be a

strategic advantage for us in terms of attracting and

retaining the very best people.”

Strategies for building culture

The desire to create a sense of belonging means that

workplace design is drawing on retail precedents.

Stores are experientially designed, creating a context

for the products that are on sale that speaks to the

For Tom Vecchione at Gensler New York, group work

is what is redefining the physical character of an

office. “Work isn’t a singular thing,” he says. “People

come together in one place to ‘group up,’ because

the social network lets them get things done.”

Serving that network requires a mix of transparency,

community, and amenity, he adds. Companies are

opening up their work environments. Workbenches

and shared offices are the emerging norm, driven by

people’s need to share knowledge. Vecchione points

to a recent Gensler study of how a global high-tech

company’s workforce used the workplace. “Mobile

workers bypassed the mobility centers and found

empty desks near the people they needed to see.

They wanted to be able to turn around and have an

immediate conversation.”

Overhearing others talking can be the quickest way

to stay in the loop. Similarly, open vistas between

colleagues allow a spontaneous huddle to morph

into a productive session—without needing a dozen

emails to plan it. “Most work settings today are

containers of process,” says Loree Goffigon, a leader

of Gensler’s global consulting practice. “They need

lots of pinup space and white walls to encourage

Right: Abu Dhabi Commercial Bank, UAE; above from left: Brown Rudnick

Berlack Israels, New York; Venables, Bell & Partners, San Francisco;

XANGO, Tokyo

dialogue 13 Workplace

set the tone in stores, retail-like workplace design

creates a “buzz” that helps foster a more dynamic

office culture.

Negotiating a distributed world

A feature of distributed work is that the people in-

volved may stay put even as they move ideas around

the planet. When real and virtual blend like this, how

do teams track their projects? It often falls on the

workplace to make their progress visible.

One way this is happening is that technology is

converging with workspace. An example is Hewlett-

Packard’s high-definition Halo video-conferencing

room, which moves beyond the “screen” paradigm to

address the needs of collaboration. It heightens the

illusion of face-to-face interaction, enabling people

to see nuances of body language, like facial expres-

sions, that are crucial to understanding. Without that

emotional intelligence, much gets lost in translation.

Companies as diverse as Shanghai Pudong Develop-

ment Bank and Zurich Financial Services have built

“collaboration centers” located apart from their ev-

eryday operations to support the direct interaction of

teams engaged in learning and innovation. With

a full complement of technology and amenities, they

are part conference center and part hotel, blurring

the line between working and socializing so their

teams can bond. That nurturing is vital to turn a vir-

tual network into a social one that can really produce.

Gary Wheeler, the leader of Gensler’s workplace

practice in London, believes we are about to see a

surge of innovation in office design. “The fluidity of

work is changing the game.” The push for more ef-

fective work settings reflects the pressing need of

global companies to get a dispersed, mobile work-

force to innovate faster and better. That in turn

“makes the workplace a much looser concept—it’s

where people come to seek ideas,” Wheeler says.

Left: Union Pacific, Omaha; above from left: RCS Services, Houston;

Fidelity Investor Center, Boston; McCann-Erickson Worldwide,

Los Angeles

lifestyles and expectations of prospective custom-

ers. Today, most companies recognize that their

offices function in similar ways to create a shared

culture that appeals to workers of different ages

and backgrounds. That diversity, coupled with

workforce mobility, means that “there need to be

cultural signposts in the office to help people quick-

ly understand their company’s social protocols,”

says Gervais Tompkin, a workplace design director

at Gensler San Francisco.

As women entered the U.S. workforce in large num-

bers, the office took on some of the characteristics

of home, especially in shared settings for informal

interaction. In a global workplace, the metaphor of

shopping may now be a more useful cultural bridge.

The ubiquitous mall, for example, has emerged

as the great equalizer, the one place on the planet

where everyone feels at home. Retail’s “customer

first” ethic also captures a basic change in work’s

social contract. As Tompkin says, “You used to work

for a company, but now you expect the company to

work for you—to provide settings that help you to

be productive.” People look to the workplace to be

hospitable and engaging. Just as music and lighting

Andrew Blum is a contributing editor at Metropolis and

Business Week Online’s Innovation & Design channel.

dialogue 13 Workplace

In overwhelming numbers, U.S. office workers say

that well-designed work settings clearly contribute

to organizational performance. Nine out of ten be-

lieve that workplace quality affects their attitude,

job satisfaction, and productivity, and also makes a

company more competitive. There is a striking dis-

crepancy, however, between this high valuation of

workplace design and workers’ perceptions of how

it is undervalued by their own companies. Close to

half of office workers—46 percent—feel that their

employers do not see providing a high-performance

workplace as a priority, and two-thirds see minimiz-

ing costs or maintaining the status quo as the main

goal behind the design of their own office.

These are key findings of Gensler’s 2006 U.S. Work-

place Survey, conducted by D/R Added Value, an

independent research firm. The survey reflects the

opinions of some 2,000 participants drawn from

eight different U.S. industry sectors—people at every

level in their organizations, and from every geo-

graphic region. Its breadth and diversity make it a

good snapshot of American office workers’ attitudes

about the workplace and its impact on personal and

organizational performance. It follows a 2005 Gensler

Workplace Survey that focused on middle and senior

managers in finance, law, and media in the U.K. Both

surveys found that office workers perceive that a well-

designed workplace helps support communication,

foster collaboration, and build culture.

Measuring the performance gap

Asked to quantify how much productivity they would

gain from a better-designed office, respondents es-

timated a boost of 21 percent. They also indicated

that an improved workplace would motivate them to

add an extra hour to their workdays. That goes right

to the bottom line, of course, which may explain why

90 percent of C-Suite respondents see the correla-

tion between a well-designed workplace and their

company’s financial health. Extrapolating from the

responses of office workers at all levels and across all

eight industry sectors, D/R Added Value calculates

that U.S. companies could generate as much as $330

billion a year in added revenue if they provide high-

performing work settings.

The workplace and competitiveness

Business Week calls innovation “the new currency of

competition,” and there is a greater sense of urgency

today across the U.S. economy about the need to help

teams generate ideas, share learning, and deliver the

breakthroughs that can take their companies to the

next level. This is the other reason for them to focus

on workplace performance.

The role of the workplace in supporting innovation

is well understood by the U.S. office workforce. Two-

thirds of survey respondents say that proximity to

colleagues makes them more effective. Most respon-

dents also believe that they get their best ideas at the

office. Yet only 30 percent of them report that their

own workplace promotes interaction and teamwork,

and only 50 percent believe that it encourages cre-

ativity and innovation. Again, there’s a gap.

Collaboration benefits from a non-hierarchical work

style, which may explain why 62 percent of survey re-

spondents indicated a great respect for leaders who

work “out in the open.” It’s a potent way to symbolize

“flatness” in an organization—and the leader’s com-

mitment to delivering innovation.

The benefits of a healthy workplace

Asked to prioritize the factors that add up to work-

place quality, U.S. office workers put working

conditions that are healthy, safe, and secure at the

top—the choice of nearly half of survey respondents.

Yet there’s a gap here, too. Only 42 percent of them

believe that the office where they work was designed

with their health and welfare in mind. Given the

increasing cost of unscheduled absenteeism, compa-

nies are finding that it makes financial sense to pro-

vide healthy work settings. More to the point, their

workforce expects them.

Closing the performance gap

The promise of adding $330 billion a year in add-

ed revenue should be a powerful incentive for U.S.

companies to get serious about workplace design.

To close the gap, they need to stop thinking of their

office real estate as “the cost of doing business” and

begin to focus on its strategic value. High-performing

work settings are not just about wrapping a physi-

cal envelope around business functions. As the vast

majority of U.S. office workers agree, a well-designed

workplace is one of the best ways for companies to

support the human capital that is the real source of

their prosperity and growth.

Jim Williamson is a workplace leader and principal

with Gensler in Washington, DC.

Gensler hosted discussions of the 2006 Workplace

Survey with its U.S. clients this summer. The results of

those sessions will be available in Fall 2006

on our website (www.gensler.com), together with

a downloadable report on the survey results.

What the Workplace Buys You

B Y J I M W I L L I A M S O N

Gensler’s 2006 U.S. Workplace Survey reveals how much office workplace design matters.

21greater productivity, on average, is what U.S.

office workers believe they could gain from

having a well-designed workplace.

$330 per year is the added revenue that U.S.

businesses could generate if they provide

high-performing office work settings.

46of U.S. office workers do not believe that a pro-

ductive workplace is a priority at their companies.

90of U.S. office workers believe that workplace

quality affects their attitude, job satisfaction,

and productivity—and makes a company more

competitive. But...

67of U.S. office workers see minimizing costs or

maintaining the status quo as the main goal

behind the design of their own office. And...

dialogue 13 Workplace

BY RUPAL SHAH

Business Week calls it “the Creative Economy.” After cost cutting their way through the downturn, businesses across the board are refocusing on their need to develop new sources of growth. That means innovation—and a new focus on design as a way for com-panies to differentiate themselves in the marketplace.

Designing for Creativity

Balancing community and privacy

“Creative space feels open and non-hierarchical,”

Dunn adds. The idea is to break down barriers to

communication and interaction. Some of the ways

this is achieved include intersecting circulation

paths, wide corridors, internal stairs, and spaces

whose visual access and transparency encourage col-

laboration. Supporting the creative process requires

a balanced allocation of “owned” and shared set-

tings, all of which should be designed to respond

quickly to people’s changing needs. “Community

space—the company hearth—gets more design

attention now,” Dunn notes. “At the same time,

companies are providing ‘retreats’ where people can

unplug, do focused work, and have private conver-

sations.” Smaller meeting spaces are desirable, as

research shows that most face-to-face collaboration

involves only two or three people.

Workspace that says creativity matters

Companies that value creativity “need to show this

clearly,” Zucker says. How they do so depends on

their culture and the possibilities of their workplace

and its larger setting. One company put its café in

the kind of space that’s usually reserved for the CEO.

In cities, companies give their employees access to

views or the outdoors—to an atrium, terrace, or a

rooftop garden, for example. Swimming pools, gyms,

and meditation rooms help people relax and recuper-

ate as part of their workday.

Location also matters more, Gensler’s Ed Wood be-

lieves. “There’s a shift to areas of the city that offer a

richer mix of uses and attractions.” Creative com-

panies attract people who like to work in interest-

ing places, Zucker adds. “They’re looking at a wider

swathe of the city and—when they can fit into them—

at renovated older buildings with high ceilings and

appealing architectural features.” The new genera-

tion of sustainable office towers has a similar appeal,

Wood says. “They fill the workplace with natural

light, modulated by the sunscreens and shading built

into their facades. They’re much more visually com-

pelling, inside and out.”

Gensler’s Rupal Shah is a regular contributor

to Dialogue.

The growing affluence of modern society has led to

what social critic Virginia Postrel calls “the aesthetic

imperative.” There is both a heightened awareness

of design and a greater value placed on such “intan-

gibles” as beauty and quality of life. “The interest

in sustainability is a clear reflection of this,” says

Gensler New York’s Ed Wood, the lead workplace

designer for The New York Times Company’s new

headquarters in Manhattan, a best practice example

of a sustainable work environment.

A process that’s closer to art or design

When teams are called on to create unique new

products, services, and experiences, their innovation

process brings them closer to the design studio than

the traditional workplace. Indeed, some argue that

business challenges are so like design problems that

traditional “business logic” and methods of analysis

don’t work anymore. All of which means that right-

brain types, those who think like artists and design-

ers, are coming into their own in the workforce.

This raises the stakes for the workplace. “The ideas

in people’s heads are what add value in the Creative

Economy,” says Barbara Dunn, a workplace leader in

Gensler’s Los Angeles office. As a result, “the empha-

sis is shifting from left-brain metrics like square feet

per person to right-brain metrics that focus on how

the workplace enhances people’s ability to generate

compelling new services and products.”

At the outset of a new project, Dunn works with her

clients to understand and map their expectations.

She may use ethnographic techniques like participa-

tory observation to uncover aspects of the existing

workplace that signal a team’s strong performance or

creative bursts. “These measures are highly specific

to each company’s DNA,” she says.

Making room for interaction

“People are the focus of the creative workspace,” says

Gensler San Francisco’s Doug Zucker. He is seeing

clients in the advertising, financial, and legal sectors

embrace team-based work styles, breaking down

their “silos” and opting for looser and more flexible

work settings with a look-and-feel that’s distinctively

their own. “Creative work is all about relationships

and collaboration,” he observes.“Creative space is

real and virtual, physical and mental, all at the same

time. It’s a platform for interaction.”

“The open exchange of ideas and expertise happens

best in relaxed environments where people can

socialize or break bread together,” Dunn says.

“They need a variety of places to congregate—for-

mal, informal, assigned, and unassigned—and

access to technology.”Top: Abu Dhabi Commercial Bank, UAE; bottom from left:

Right Management, Amsterdam; Cooley Godward, LLP,

San Francisco; Clifford Chance LLP, London

dialogue 13 Workplace

MICHAEL BUCKLEYIS A NATIONALLY KNOWN CORPORATE REAL ESTATE ADVISOR WITH ERNST & YOUNG AND HALCYON REAL ESTATE

ADVISORS. HE ALSO TEACHES AT COLUMBIA UNIVERSITY AND RUNS ITS CENTER FOR HIGH DENSITY DEVELOPMENT.

BUCKLEY IS A FORMER TRUSTEE OF THE URBAN LAND INSTITUTE, A MEMBER OF THE REAL ESTATE ROUNDTABLE’S

RESEARCH TASK FORCE, AND A FELLOW OF THE AMERICAN INSTITUTE OF ARCHITECTS AND THE ROYAL INSTITUTE OF

CHARTERED SURVEYORS.

Does higher density matter in the workplace?

MB Our research at Columbia suggests that the

next workplace revolution will be driven by col-

laborative work. Higher densities permit people

to cross business unit boundaries and have the

chance encounters that fuel business process inno-

vations. This demands more creativity in office lay-

out—flexible spaces with breakout rooms, a larger

number of small team rooms and timeshared of-

fices, and quiet rooms for individual study.

There’s a new generation—Gen-Xers and younger

creatives—who want to work in these great high-

density locations. They view work as a series of

fluid tasks. They want private offices, for exam-

ple—they don’t care how tiny, they just want a

place to put their “stuff”—personal belongings

and notes. Some firms have reacted to the almost

universal dislike of “hoteling” by advertising di-

rectly to young people, “We’ll give you an office.”

Judicious, super-considerate use of hoteling—and

a mobile workforce—can make such mini-offices

affordable. There is a growing realization among

corporate real estate executives and HR profes-

sionals that you don’t want to lose someone for

the wrong reason. You could lose them over bad

business or over bad compensation, but please

don’t lose them over the quality of the workplace.

What drives office location decisions today?

MB Such factors as market dynamics, expansion of

strategic business units, evolving workforce skill-

sets, occupancy costs, and the regulatory environ-

ment come into play. For U.S. companies, quality

of life is looming large because they’re competing

for a very scarce resource—the experienced “cre-

atives” and a younger workforce. Columbia’s recent

research on global development incentives shows

that for multinationals—companies operating out-

side the U.S.—strategic links to technology and to

industry clusters are very important. If you’re go-

ing locate a big regional office in Asia, you might

choose Singapore, because those linkages are in

place. Compared to other cities in Asia, it’s an easy

place to do business.

When companies make these strategic location

decisions, they’re looking at context, not facilities.

They’re focused on infrastructure, incentives, labor,

and quality of life. You can always get cheaper space

and cheaper labor, but India, for example, is win-

ning offshore software development and call cen-

ters because they speak English, they have a legal

system that protects intellectual capital, and they’re

highly literate and technically strong.

What makes a city like New York attractive?

MB There’s a high degree of correlation between in-

dustry clusters like banking and high-density cities

like New York. They offer more chances for business

interaction and more opportunities for innovation.

There are cheaper places in terms of operating costs

and security, but they don’t offer creative people the

kind of “friction” that clusters do. Let me give an

example. One of the big investment banks head-

quartered in Manhattan recently built a high profile

office tower in Jersey City. When the bank tried to

move their traders there, they said, “We’re not go-

ing.” They don’t work in a vacuum—they get smart

by rubbing elbows with traders from other banks—

impromptu encounters while walking around dur-

ing the day or after work. That’s why it’s called “The

Street.” Today, this same bank has a new office tow-

er coming out of the ground—in Battery Park City,

next to the Wall Street cluster—so their traders can

talk trades with their peers.

So “talent”—and retaining the best producers—is

the other driver. High-density zones are living labo-

ratories for talent, which is why HR people love

them. They don’t have to go far to hire, because the

talent pool is better defined and people can easily

make lateral moves among companies. Their re-

placement costs for finding employees is lower,

because it’s easier to hire a trained cadre within the

cluster than outside of it. And young talent increas-

ingly wants the urban feeling that density provides.

It’s not just a lifestyle choice. It’s still the dream of

most U.S. high school seniors to go to these cities to

test themselves against the best and experience the

unique cultural offering they provide.

ROUNDTABLE

When Work Spreads Out

The growing geographic distribution of work is both a necessity and a huge challenge for many companies. What does it mean for their work settings and workforce?

Dialogue talked with four experts

who can speak to this question from

the perspectives of human resources,

real estate, operations, and technol-

ogy. Here’s what they told us.

“Higher densities permit people to cross business unit boundaries and have the chance encounters that fuel business process innovations.”

MICHAEL MCMAHONIS THE CHIEF PROCUREMENT OFFICER AND DIRECTOR AT DELOITTE SERVICES, LP, THE OPERATING

ARM OF DELOITTE, ONE OF THE WORLD’S LARGEST ACCOUNTING AND CONSULTING FIRMS, WHERE

HE IS RESPONSIBLE FOR WORKPLACE SERVICES, STRATEGIC PROCUREMENT, TRAVEL MANAGEMENT,

AND GLOBAL CONFERENCING.

What’s reshaping Deloitte’s workplace?

MM Almost two-thirds of the employees of the

Deloitte U.S. Firms are GenX and GenY. Our work-

force in general is also becoming far more diverse

in terms of ethnicity, nationality, and lifestyle. That

means that the person we’re trying to motivate is of-

ten receptive to a whole new set of connectors than

the older generation. Another difference is mobil-

ity—in our business, the client service people are

typically out in the field. If a hundred new consul-

tants join us on the same day, assigned to the same

office, they are not likely to meet up again unless we

help make that happen.

Between diversity and mobility, there’s a huge para-

digm shift occurring in how people are managed.

And this means that you have to deal with the issue

of the workplace on a more strategic and multi-func-

tional level. You have to look at it in the context of

your business strategy, your human resources strat-

egy, and your technology strategy.

Offices may be social destinations and places for pro-

ductive work, but their more strategic roles are to be

an effective communication medium and the physi-

cal connection with your company’s culture and

overall business strategy. They have to embody who

you are, how you think, and what you stand for—the

attributes that set you apart as an enterprise.

Can you give examples of the paradigm shift?

MM Take lifestyle expectations. It’s not just about

younger people entering the workforce. There are

broader changes occurring in the family structure.

To attract the best talent, we also have to be success-

ful in retaining them. So, for example, we aim to cre-

ate lifelong relationships with our people through

all stages of their careers. One of the realities of the

changing family structure is that more women in

professional positions are in the workforce now.

That means that women make up a significant por-

tion of our best and brightest. We have to think hard

about how to retain them, recognizing that there

are gender-specific priorities to consider if we want

to do so. If a woman who’s a career professional at

the Deloitte U.S. Firms decided to start a family, we

would work with her so she could do this and then

reintegrate her into our workforce.

Or consider mobile workers. The leadership of the

Deloitte U.S. Firms doesn’t have to be convinced

they exist. They can see that certain elements, dy-

namics, and characteristics of our workforce are

very different from what they were 10 years ago,

even five years ago, and they’re continuing to

change. Our workplace has to connect people, cul-

ture, and technology in a way that is attractive,

flexible, and interactive, especially for GenX and

GenY. Part of why they come to work is because the

office is a social destination. And it should be—it’s

how they reconnect with their peers. To compen-

sate for mobility in our consulting practice, we have

something called Friday Flybacks—everyone leaves

their client sites on Thursday night and spends Fri-

day at their local office. It lets them catch up and

reconnect, personally and culturally.

Won’t better technology help to compensate?

MM There’s no silver bullet. For us, it’s something

of a myth that you have to have more technology in

the workplace, although all of our new workplace

environments are wired and wireless. People believe

that the latest technology is all that young people

really want, but the reality is that they want a work-

place where they can listen to their iPods without

being criticized. So I believe it’s more about having

a flexible and non-prescriptive culture than about

technology per se.

“Our workplace has to connect people,

culture, and technology in a way that is attractive, flexible, and

interactive, especially for GenX and GenY. Part of why they come

to work is because the office is a social destination.”

dialogue 13 Workplace

“It’s not so much about outsourcing now, but the fact that the search for talent is global. As talent becomes more widely distributed, the workplace changes.”

ROUNDTABLE

PAUL SANCHEZIS THE GLOBAL LEADER OF THE ORGANIZATIONAL RESEARCH & EFFECTIVENESS GROUP AT MERCER

HUMAN RESOURCE CONSULTING IN NEW YORK. BEFORE JOINING MERCER, HE RAN ONE OF THE

LARGEST WEST COAST MARKETING RESEARCH FIRMS AND DIRECTED ANOTHER CONSULTANCY’S

HUMAN CAPITAL GROUP.

How is knowledge work changing?

PS For ten years, the geography of work has been sig-

nificantly altered by technology. Many workers are

now part of virtual teams, and their companies are

often virtual agglomerations. Especially when it’s

information- or knowledge-based, the work can oc-

cur almost anywhere, so such companies can grant

a great deal of freedom to their work teams. They are

finding that it is more efficient and effective when

project teams link up across time zones. Of course,

this creates work/life balance problems—you’re al-

ways just a Blackberry buzz away from work.

For companies, all of this increases the complexity.

It’s a rare company now that has a clear line of sight

and a traditional hierarchical organization. It’s much

more likely to be a matrix, with virtual teams expand-

ing or contracting as the work gets done. People on

those teams can belong simultaneously to function-

al and geographical areas, and both will influence

how they work. The only way for these companies

to achieve their common purposes is through com-

munication, collaboration, and cooperation, with

shared goals and work processes. That’s the nature

of a matrix—it cuts across all levels. It can be quite

effective at achieving the synergistic impact of com-

bining standardized processes with local insight.

How is this affecting the workforce?

PS We’re seeing evidence that people in the work-

force aren’t giving their hearts and minds in the

same unqualified way that they might have 15 years

ago. They’re more skeptical, and more willing to

examine the nature of their work relationship. It’s

caused by outsourcing and offshoring, the impact of

technology, the altered physical environment, and

other factors that make people much more critical

of their work experience. Many companies are in the

early stages of coming to grips with this, and only a

with new skills and training. Previously, every

company could expect most of their workers to exit

between the ages of 57 and 62. Now that departure

age is creeping up because workers are healthier and

may want or need to work longer. They may be more

experienced in their particular specialties, and com-

panies may need their expertise, but these organiza-

tions also have to consider their younger workforce—

one that’s clamoring to move ahead.

This points to a related question that many com-

panies are asking: What will their workforce look

like in the future? Will it be centralized or decen-

tralized, younger or older? How will they be able to

pull together people of different ages and cultures?

Will they be able to bridge the different generations

in the workplace? And, reflecting the influences of

technology and economics, where will the workforce

come from?

What’s the impact on the workplace?

PS There are three major components—environmen-

tal, social, and contextual—that, alone or together,

can significantly enhance or detract from the work

experience. The physical aspects of work are most

influenced by workplace design and technology. The

social impact is caused by demographic changes

and by work and work centers moving offshore. And

there are also the intangibles that relate to a compa-

ny’s ethos—where we work, for example, and the

nature of our relationships with our colleagues.

We’re still human beings, carrying our anthropologi-

cal and genetic codes with us. As companies strive

for efficiency, there’s always the danger that they will

forget this, and make decisions based on cost alone,

for example, that end up creating a sterile work expe-

rience for their employees.

few of them have figured out how to create a high

degree of employee satisfaction and engagement.

Without an ongoing sense of participation, people

in a distributed workforce can be alienated from a

company’s core identity or employer brand. That has

a subtle but pervasive impact on the work experience.

People are less affiliated with their companies and

more affiliated with their professions—but compa-

nies still need to win their allegiance. There’s already

some inherent tension between the demands of

geography and function. Thus the dispersion of the

workforce makes it harder to create an identifiable

organizational brand. And the more virtual compa-

nies are, the harder it is to develop the sense of

direction, energy, and belonging they need to engage

the workforce to help them compete and innovate.

It can be done, but it requires awareness, focus, and

resources to make it work.

Younger workers, people in their twenties and thir-

ties, are probably better at relating to coworkers who

they may never see but are in touch with virtually.

Older workers, who need to collaborate and have

mentor relationships, may not have the same facil-

ity. Our survey data supports this, showing a gap

between the people at the top, whose vision of the

company is energizing and gives them focus, and

those below them, who feel much more disengaged,

both because the hierarchy is flatter and because the

layers are stressed.

What about workforce demographics?

PS An aging workforce creates its own set of issues,

especially around the need to attract and retain tal-

ent. It poses a dilemma for companies as they try

to balance their need to retain the experience and

know-how of their older workers with their need to

thin their ranks so they can bring younger people in

KEN CRANGLEIS THE GENERAL MANAGER OF HEWLETT-PACKARD’S NEW HALO COLLABORATION STUDIO BUSINESS, WHICH

TAKES A SUPERCHARGED APPROACH TO VIDEOCONFERENCING, GIVING PEOPLE A GREATER SENSE OF MEETING

FACE-TO-FACE. HE PREVIOUSLY MANAGED THE COMPANY’S DIGITAL PUBLISHING SOLUTIONS AND

INKJET SUPPLIES BUSINESSES.

Creating an intimate connection is essential. With

Halo, the people across the table are always “front

and center.” It removes the distractions so they don’t

undermine the quality of the interaction. Halo pro-

vides matrix-based, globally distributed organiza-

tions with super-nodes that support a fast-moving,

collaborative culture, freeing their virtual teams

from the problems of dysfunctional communication.

The acid test, of course, is if people actually use it.

Our customers are seeing usage rates now of 160 to

200 hours per month.

You can’t use Halo at your desk—is that a problem?

KC Remember that HP’s first LaserJet printer re-

tailed for around $3,500 and weighed fifty pounds—

but the progress of technology quickly changed that

profile. We saw that desktops would soon become

the productive place, so productivity tools like print-

ers would have to move out of the IT area and into

the workspace. As that played out, the LaserJet

dropped dramatically in price, size, and weight—a

svelte little mechanism. So think of the Halo room

as a big, clunky LaserJet. The technology trends are

similar. Display, image capture and manipulation,

compression technologies, the ubiquity of fiber—

you put them together, and Halo will start to change.

It’s also scalable. You can shrink it down to desktop

size or stretch it out for boardrooms and classrooms.

What’s changing work-wise at Hewlett-Packard?

KC The Internet has changed a lot of our fundamen-

tal business structures and models. People can be

dispersed and connected. With globalization, com-

panies like ours are more competitive if they can

work around the world. Some of the smartest soft-

ware engineers are in places like Russia, China, and

MIT. To be competitive, we have to get those people

to work for us. It’s not so much about outsourcing

now, but the fact that the search for talent is global.

As talent becomes more widely distributed, the work-

place changes. Ten years ago, HP didn’t have 10,000

people working in India. How do you get all these

people together? How do you make them productive?

At HP, the globalization of our work environment

meant that people needed to participate from other

places. Short of staying at their desks 24 hours a day,

they needed technology in order to stay engaged.

Was the technology available to make that happen?

KC No, it wasn’t. Like a lot of other global companies,

we went too far too fast. As our workforce dispersed,

our collaborative tools weren’t up to the job. With

collaboration, sitting across the table is still the ide-

al. But when you have to travel for a face-to-face meet-

ing, you can burn up a day getting there and another

getting back. If the time between meetings stretches

out, the quality of the relationship starts to decline,

so you get to a point where you have to meet again.

It’s a vicious cycle, and most people don’t operate

very well doing it. Seeing this and experiencing it

ourselves, we’ve made a push to develop new collab-

orative tools that can turn your workplace, wherever

you are, into something that’s like the next aisle over.

That led DreamWorks and HP to develop the Halo

concept.

How does it differ from other collaborative tools?

KC “Group forming technologies,” as they’re called,

can range from smoke signals and semaphore flags to

phones, NetMeeting, and conventional videoconfer-

encing. What sets Halo apart is that it preserves all of

the social dynamics that make collaboration effective.

It creates the illusion of being in the same space with

your virtual collaborators, so you can make eye contact

and read their facial expressions and body language.

When companies start down the Halo path, their first

thought is that they can save travel costs, with less

wear and tear on their workforce—perhaps a better

work/life balance. Some months later, they discover

that they’re actually more productive, generating

more ideas. Most large companies have a lot of cul-

tural diversity. HP’s headquarters culture in Palo Alto

is very different from our engineering culture in Cor-

vallis. San Diego is not the same as Boise. They’re as

different from each other as HP Singapore is from HP

London or HP Madrid. By knitting people together

across these sites, Halo helps them iron out these dif-

ferences. That frees them to collaborate better and

resolve problems faster.

“Younger workers, people in their twenties and thirties, are probably

better at relating to coworkers who they may never see but are in touch with virtually.”

dialogue 13 Workplace

Herman Miller International’s new headquarters guides customers to responsive solutions.

A Sense of

B Y D A V I D S O K O L

Discovery

dialogue 13 Workplace

HDoes this sound like a good moment for a refreshing

visit to the countryside? She doubts it. What if the

journey would help determine how best to furnish the

office to support her colleagues? Fine, she’ll bring her

Blackberry—but the trip had better be worth it!

That scenario played through the heads of Gensler’s

Stephen Andrews and his London-based team as

they designed Herman Miller International’s new

headquarters, nicknamed “The Village Green,” in

Chippenham, a West Country market town an hour

and ten minutes by train from London’s Paddington

Station. “Getting there is a commitment,” says

Andrews, “so the destination has to make the jour-

ney worthwhile.”

Their new location is near Bath, where Herman

Miller International was headquartered for the pre-

vious 32 years. A lot of thought was given to moving

to London, which is home to many of their competi-

tors. In the end, they opted to stay in the area, feel-

ing that being in that metropolis would dilute the

mission they had set for their new headquarters.

“We want our customers to feel that they have dis-

covered something innovative,” says Antony Byrne,

Herman Miller’s design manager for the project.

That sense of discovery is an apt metaphor for the

company’s efforts to capture their clients’ unique

requirements and guide them to a responsive solu-

tion, he adds.

Herman Miller started off working with a local devel-

oper on a design-build approach to their new build-

ing. They then turned to Gensler to improve on that

proposal. To convince them that alternatives were

possible, Andrews and his team spent a weekend

cooking up something better. “The company had a

green agenda and wanted to create a great customer

experience. That called for something with pres-

ence, not ordinary architecture.” (Cue the visitors

grumbling about the 70-minute train ride; now imag-

ine them unimpressed by their final destination.)

ere’s the scenario: imagine a London law firm in expansion mode, about to take four floors of a new building in Canary Wharf. The one shouldering this burden has navigated planning, budgets, and the push-and-pull of office growth, but the move is uncharted territory. The timetable is compressed, the consultations and handholding nonstop.

Herman Miller was intrigued by this mutinous exer-

cise. Andrews sealed the deal by offering to match

the old design-build price, a promise fulfilled when

the headquarters opened in February 2006.

Comprising just 20,000 square feet on two floors and

housing some 100 employees, the building is a pint-

size addition to the neighborhood. Andrews explains

that every design element packs a bigger wallop. For

example, there is no direct approach to the triangu-

lar site, which features meadow grasses and a retain-

ing pond. The first glimpse of the building takes in

its double-height glazed façade, framing activity in

the café and collaboration zones, and serving as a

shop window for Herman Miller’s products. Then

you encounter a front entrance that’s clad in stone

and capped by a sunshade—a strong visual contrast

that makes the building seem larger than it is.

The same principle yields a similarly dramatic effect

inside. The ground-floor reception area, meet-

ing rooms, and mockup area are small, mutually

exclusive zones that feature different floor finishes,

lighting schemes, floating planes, and sculptures.

Huge sliding timber doors, lacquered in pale green,

provide the thresholds between the different worlds.

“Think of it the way you would a Japanese garden,”

Andrews says. “It’s a series of small boxes. You have

to pass through a gateway to get from one box to the

next.” Natural finishes blur inside and outside. To

remind people where they are, there are intermittent

views of the countryside beyond the building’s walls.

This strategy of design-as-discovery is the archi-

tectural equivalent of a learning process, explains

Gensler’s Yetta Reardon-Smith, another key member

of the team. “The building gently encourages people

to get to know each other and then talk through the

problem at hand—to discover, review, inspire, and

finally arrive at a solution.” The headquarters and its

settings are organized and designed to give a natural

sequence to this process.

Upstairs, Herman Miller gives reality to all the talk.

The double-height space is a fully functioning head-

quarters designed with a wide assortment of the

company’s products, amply demonstrating how they

perform for different user needs in a variety of open,

private, and “touchdown” work settings. By the time

customers get there, it’s likely to be mid-afternoon,

just when the temperature sensors in the floor slabs

are triggering the windows to open. Customers may

also note the sustainable timbers, recycled carpet-

ing, motion detector-activated lighting, and natural

ventilation. Those curious will learn that wastewater

has been minimized and rainwater harvested, fea-

tures that helped earn the building LEED Gold and

BREEAM Excellent ratings.

“We take the environmental issue very seriously,”

Byrne says. Indeed, one thing that led them to

Gensler was their desire to exemplify this concern

and highlight the sustainable nature of their product

lines, the result of energy efficient, non-polluting

manufacture and safe and user-friendly materials.

“They last longer and are good for the planet,” he

adds. “Being out in the countryside in a healthy,

light-filled building brings home that message.”

Our time-pressed Canary Wharf lawyer can only

agree. Thanks to The Village Green, she made

progress on her office move and left with a clear

conscience—all in the same day.

David Sokol is a New York–based writer who

contributes regularly to Metropolis, Azure, and

Interior Design magazines.

dialogue 13 Workplace

What computers and networks were to business in the latter half of the 20th century, innovation may be to the first half of the 21st. If websites and press releases are to be believed, innovation is every major company’s primary focus.

While some companies are genuinely innovative,

the term is as much a cliché now as the “new and

improved” label was for consumer products in the

fifties and sixties. Yet the value of real, concrete in-

novation is undiminished. While developing better

services and products is still the goal, getting there

requires an organizational environment that sup-

ports much more fluid ways of working.

Globalization and technology are changing the na-

ture of demand for many industry sectors, unleash-

ing a Pandora’s box of problems. As formidable new

competitors disrupt their traditional markets and

supply channels, businesses are feeling the heat.

Opening things up

“The biggest change for businesses is that they are

moving to distributed organizational architectures

so they can bring the right people together to make

decisions,” says Tara Lemmey, founder and CEO of

San Francisco’s LENS Ventures, a network of strate-

gists. Behind the shift is the need for improved col-

laboration—not just across companies, but also with

their partners, suppliers, and customers.

One way that companies are fostering this is to break

down the scale of the workplace and tailor it more

closely to the way people really collaborate.

A good example is a current Gensler client—a phar-

maceutical giant with a substantial U.S. presence.

The company noticed that its research teams alter-

nated between larger and smaller group meetings

in their innovation process. In response, Gensler

proposed a workplace that combines a shared, open

teaming environment—to increase spontaneous in-

teraction—with smaller, acoustically private spaces

where discussions can occur among several people

without distracting others. “This isn’t just for R&D,”

says Gensler’s Donna Schroeder. “The company is

applying it across the board.” From studying the

creative process, it’s known that innovation efforts

shift back-and-forth between full-team collabora-

tion and more focused, personal work. “We’re find-

ing that for creative teams, even so-called personal

work is interactive, part of the free flow of informa-

tion that’s so important to innovation. Just provid-

ing private quiet space for concentrated work miss-

es this whole dynamic.”

Increasing the hit rate

Larry Keeley, president and co-founder of Doblin

Inc., notes that companies often substitute slogans

like “Think out of the box” for the real work of build-

ing an innovation culture. These exhortations can

actually cause “a precipitous decline in innovation

rates,” he says. Doblin’s studies of innovation show

that only 4.5 percent of innovation efforts generate

a positive return on investment. “In what other field

do people tolerate a 95.5 percent failure rate?” The

reason they fare so badly is that most people lack

experience with the innovation process. “The same

methods that work brilliantly for those with profes-

sional training are calamitous in the hands of un-

practiced amateurs.”

The solution, Keeley says, is to take the time to mas-

ter the fundamentals. A company should diagnose

the patterns of innovation in its industry sector, its

customers, and its suppliers, and assess its own past

successes and failures. Developing an “Innovation

Ambition Plan” is also essential to keep innova-

tion efforts focused on what the company hopes

to achieve—its “innovation intent.” Aligning these

efforts with its core competency will make success

more likely, Keeley adds. However, a company whose

strategic strength is in one area may need to find

partners with complementary strengths to ensure

that its innovation efforts get full traction.

Keeley cites Target as an example of a company that

has built an innovation culture on its core competen-

cy. To extend its market edge of delivering products

designed with a “point of view,” Target collaborates

directly with its suppliers. “All the corporate defenses

are gone,” he says. “Target will give a supplier’s de-

sign team access to a million bucks worth of con-

sumer research. By sharing those insights, they make

it easier for the team to come up with bold ideas.”

And Target’s commitment to buy bold new prod-

ucts gives the team an added incentive to pull it off.

“There’s a shared sense of mission.”

Moving to a higher level

It often takes a leader to instill an innovation culture.

“Someone has to be the evangelist,” says Loree Gof-

figon, head of Gensler’s strategic consulting practice

in Los Angeles. “Someone has to push and pull the

company to move to a higher level of organization.”

Goffigon is pointing to the corporate development

work of a Gensler collaborator, University of South-

ern California Management Professor David Logan.

His studies suggest that successful innovation is

most likely to occur when companies move from an

individual to a group focus—from “I’m great!” to

“We’re great!” Real collaboration—people sharing

information and working toward common goals—of-

ten follows, even in industry sectors where it is not

typically encouraged. The success rate goes up ac-

cordingly. The organizational pinnacle is what Logan

calls “level five”—those rare companies where “Life

is great!” That attitude lets them soar above competi-

tors. It’s hard to stay at that peak, he notes. “Market

opportunity fades or others catch up.”

Design firms as a model

Design has become a relevant benchmark for busi-

ness innovation, according to Roger Martin, Dean

of Toronto’s Rotman School of Management. He

Organizing for Innovation

B Y J O N A T H A N L I T T M A N

Howard Building Corporation, Los Angeles

dialogue 13 Workplace

believes that many companies would benefit from

adopting the workflow model of leading design

firms. “They organize their workforce around proj-

ects—when you’re on a project, there’s much more

of a sense of having to accomplish something.” He

believes that assigning people “permanent” tasks,

as most companies do, has become a barrier

to innovation.

Design firms also approach innovation different-

ly, Martin says. Instead of inductive and deductive

reasoning, designers make use of “adductive” rea-

soning, which deals with “the logic of what might

be—what is plausible rather than certain.” A healthy

respect for adductive reasoning is essential for cre-

ative companies, in his view. “If you want innovation,

you have to ban the phrase, ‘Prove it!’ After all, what

innovative thing can be proven in advance?”

So what does it mean to base innovation on what

might be? Martin points to Procter & Gamble. When

P&G’s CEO visits ordinary families in their homes to

hear firsthand about their needs and how they view

his company’s products, he’s not doing statistical-

ly valid market research. Instead, he’s trying to get

past “conventional wisdom” to get a more intuitive,

on-the-ground sense of how P&G fits into the every-

day world of its customers. Those impressions may

prove more valuable to him than surveys or focus

groups to give overall direction to P&G’s product

innovation efforts.

Setting the stage for innovation

Zurich Financial Services’ approach is to focus on

collaboration and coordination at the top. The in-

surance-based financial services provider realized

that its global expansion—Zurich now operates in

more than 70 countries—was a strategic opportunity

to grow its business through innovation. Yet its size

made this much harder. The company’s solution was

to create Zurich Development Center, a six-build-

ing complex that brings senior people together for

up to three weeks of planning, strategizing, train-

ing, and social bonding. “They leave with a shared

agenda, mindset, and language,” says Dr. Jens Maier,

a management consultant who was one of the origi-

nal “architects” of the Center. Face-to-face interac-

tion creates the personal ties a global team needs to

implement a new business initiative. It also means

that they are really convinced that the initiative can

succeed. “In 2000, the year it opened, the Center gen-

erated four out of 15 new products for Zurich,” Maier

says. “That’s a tangible outcome!”

The Corporate Executive Board (CEB) faced a similar

problem on a regional scale. Consistently ranked as

one of America’s hottest growth companies, it need-

ed a stable but flexible “platform” for developing and

delivering best practices research, tools, and train-

ing to its corporate and institutional clients world-

wide. “Because of its fast growth and its co-location

in five different buildings around Washington, DC,

the company’s different departments tended to fo-

cus exclusively on their own work,” explains Gensler

design director Jill Goebel. A new 24-story building

in Roslyn, VA will bring everyone under one roof—in

a workspace that she and her team are designing to

support collaboration.

CEB’s innovation model makes a conscious tradeoff

between personal and collaborative workspace, par-

ing down the one to make room for the other. Private

offices are compact, but the workplace as a whole

provides a range of settings to support interaction,

whether for two or three people in conversation or

for larger groups. Even the coffee bars can open up

to accommodate full-team meetings. “The idea is to

create dialogue across departments,” Goebel says.

“CEB’s new headquarters lends itself to very fast re-

configuration, so when new teams form they can be

immediately supported.”

Innovation takes teamwork

“Organizations and individuals alike have to avoid

defaulting to old behaviors,” adds Gensler’s Goffi-

gon. Until new rules and structures arise to replace

the old ones, “people have to be more comfortable

with ambiguity.” Like Doblin’s Keeley, she sees a lack

of experience hampering innovation efforts that in-

creasingly depend on teamwork across a distributed

workforce. “That takes practice,” she notes. “It takes

much longer than most companies realize for today’s

spread-out, interdisciplinary innovation teams to

pull together and start working productively.”

“At the core of a great team are people who are self-

confident about their skills and open to collaborat-

ing with others,” Goffigon says. “Great teams attract

‘whole people’ who can interact authentically—with

both intelligence and humor. These are the essential

human traits that enable people to come together to

deliver innovation.” Creative companies get this, she

adds. “Everything they do is designed to bring these

traits to the fore.”

Jonathan Littman writes frequently on innovation.

His latest book, with Tom Kelley, is The Ten Faces of

Innovation (Currency-2005).

Top: Doblin Inc., Chicago; bottom from left: The United Way of The

Texas Gulf Coast, Houston; Zurich Development Center, Zurich

dialogue 13 Workplace

??embracing uncertainty

by Jonathan Littman

THERE ARE TWO OVERRIDING ISSUES FOR GLOBAL COMPANIES TODAY—THE UNPREDICTABILITY OF THEIR MARKETS AND THE PRESS OF NEW COMPETITORS THAT LEARN

AND INNOVATE FASTER THAN THEY DO.

John Seely Brown: Established companies face new

competitors, often emerging from the ranks of their

suppliers. They also face the growing unpredictabil-

ity of demand in their markets as fickle customers

press for cool new products and services. This is play-

ing havoc with their basic operating assumptions.

Until recently, most global companies were mes-

merized by the idea of making themselves more and

more efficient through business process reengineer-

ing. Wall Street was telling them, “We want quarterly

returns predictable to the penny,” so a company’s

ability to operate efficiently and forecast demand

precisely were what defined success and dictated its

structure, policies, and rewards. Those mechanisms

worked fine in the 1990s, but they don’t work in this

new climate, because if you become overly concerned

with efficiency, you start squeezing out innovation.

A lot of innovation needs a little slop to it.

What do you do when your traditional markets

become unpredictable?

JSB You have to start to focus on your company’s

unique specialty. What makes it truly distinctive?

How can you mobilize all the resources around it?

Are you best at serving up customer relationships or

at the logistics of delivering stuff? Or are you a com-

pany that focuses on product innovation? If you can

decide to put all your weight on what you are best at,

and reduce the mass everywhere else, then you can

move with agility and win. It’s not necessarily taking

an axe to the things that don’t fit, by the way—you

can spin them out as separate companies, with their

own trajectories. But first you need to ask how you

can access, leverage, and learn from the required

complementary assets.

Doesn’t loss of ownership compromise your ability

to tap those assets?

JSB If you can attract and pull them together at a

moment’s notice, you don’t actually have to own or

control them. You can work productively with them

and in some cases even nurture them. Take Procter

& Gamble—they now outsource a huge amount of

their R&D. They have 7,000 chemists inside the com-

pany, but there are 1.5 million more outside who can

help innovate their products. Their first step was to

create the website they use to outsource innovation

on a problem basis. They will post a challenge on it,

and anyone around the world who has been quali-

fied by them can try to meet it. Now they go much

further—they see a need for something and then

identify some small company somewhere that’s

already delivering it. They’ve got the customer rela-

tionships, so they can offer that company a world-

wide channel. That way, they can go out and find

leading-edge products from tiny labs that nobody

else knows about.

INSIGHT

dialogue 13 Workplace

good at. As a result, when they get a new order, they

can string together a logistics chain that wires these

specialist suppliers together—creating a supply path

for just one product from their vast web of longer-

term relationships. Yet they avoid having “captive”

suppliers—they guarantee that they will take 30

percent of a supplier’s operating capacity, but never

more than 70 percent. They want their suppliers to

work for their competitors. And yet they share infor-

mation with their entire network, orchestrating its

flow from supplier to supplier.

Won’t these companies lose control of their intellec-

tual property?

JSB They don’t want control—they want to accelerate

learning. For example, they pay attention to who else

contracts with a supplier for the rest of its output. If

it’s their best competitors who are doing so, that’s

an independent signal that the supplier is doing

good stuff. Li & Fung will use those people year after

year, so the transaction costs go down. They have to

be fair with their suppliers, because otherwise they

won’t give them 70 percent of their capacity when

they ask for it. But Li & Fung’s real accomplishment

was to figure out how to get better faster than any-

devastating—in Vietnam, their market share plum-

meted from 90 to 30 percent. This is an example of

swarm innovation—thousands of suppliers swarming

around and building their own network and designs.

It’s mostly bottom up as opposed to top down. Of

course, the new assembler still had to approve the

final designs, but that’s a lot different than imposing

rigid, top-down specifications on the suppliers.

How do established companies cope with competitors

like these?

JSB They have to get out on the edge, because that’s

where the newest ideas are. It can be the edge of

youth, avant-garde suppliers, or developing econo-

mies. There are a lot of edges to think about. One

company that’s a model for how to do this well is

Li & Fung, the Hong Kong-based apparel maker

and distributor.

Like Toyota, Li & Fung has built a supplier network.

The difference is that they have some 7,500 suppliers.

How well they do this is unbelievable—their return

on investment equity runs about 50 percent a year.

They do it by orchestrating: they’re the conductor.

They qualify every supplier and figure out what it’s

Do you have to be a Toyota to do this, or can it work

at a smaller scale?

JSB China is full of smaller-scale examples. Take the

city of Chongqing. In the early nineties, the big Japa-

nese motorcycle brands moved in. They started joint

ventures with state-owned enterprises, exploiting the

difference in wages to produce cheaper motorcycles.

They got the price down, but the local suppliers de-

veloped more and more skills. In 1997, one of them

said, “Why can’t we be an assembler, too?”

The big brand joint ventures designed their motor-

cycles with very tight specifications that each sup-

plier had to meet. The new assembler said, “I’ve got

a different idea. Let’s get together with our suppliers

in the teahouses and get them to come up with their

own designs.” The teahouses are where innovation

occurs in Chongqing.

Instead of following the big brands’ strategy, the new

assembler told his suppliers, “I want something like

this”—it was all very loose, leaving it to them to fig-

ure it out using all their newly-acquired manufactur-

ing skills. What followed was a huge amount of on-

the-job improvisation and local optimization—and

lots more conversation in the teahouses. The out-

come was a $200 motorcycle. The big brands’ equiva-

lent models cost $700. The result for them has been

body else. They built an agile and adaptive system

that accelerates learning and talent. And they did it

by working with their network of suppliers and get-

ting them to learn from each other.

Because of the dynamic nature of things, we’re mov-

ing into a world where the action is no longer in

building up stocks of goods and intellectual prop-

erty. It’s in participating in flows. Business in general

is becoming like the fashion industry—fashions

don’t last very long, so except for the rip-off of labels

and trademarks, you don’t protect a fashion. Once

a design hits the shelf, it’s gone. In the world of fast

turns, it’s the ability to turn fast that matters. Pro-

tecting the past is less important than being on the

edge—the leading edge.

Can’t companies get the same learning going across

their own units?

JSB Not easily. With a partner, it’s a different cul-

ture—one with much less “politics.” To innovate

faster and better, you need partners that do their

stuff so well that you both learn—their brilliance

and yours come together. You may clash, but you can

both make that clash productive. Plus partnering

like this is almost a machine for generating talent.

But the real reason to do it is to accelerate learning.

The COO of Wipro Technologies in Bangalore told

“ I’ve got a different idea. Let’s get together with our suppliers in the teahouses and get them to come up with their own designs.”

John Seely Brown (www.johnseelybrown.com), the

former director of Xerox Palo Alto Research Center,

is the co-author of The Only Sustainable Edge and The

Social Life of Information, both published by Harvard

Business School Press.

Jonathan Littman is the co-author of two recent

books on innovation.

INSIGHT

But these are really one-off transactions. Compa-

nies like Toyota take this further, institutionalizing

these relationships and figuring out how to lower

their transaction costs. In the auto industry, a lot of

companies still deal with their suppliers by dictating

to them. They say, okay, we’re going to have competi-

tive bidding to see who can build this component the

cheapest, and here’s exactly what it needs to be. The

suppliers have no incentive to be innovative. It’s all

about price—there is no real collaboration. Toyota

takes the exact opposite approach. They ask their

suppliers, “Can we learn from you? Can you find a

better way to do this? In fact, can you work with other

suppliers so your part fits with theirs and the result-

ing product or component is better and cheaper?”

Toyota views their first tier suppliers as an innova-

tion network. It’s a beautiful example of distributed

innovation. When innovative suppliers are brought

together, a kind of productive friction starts to hap-

pen. Toyota doesn’t own any of these companies, but

their supplier network is like an extended firm. The

relationships are relatively long-lived, not transac-

tion-based, so there’s much less concern about nego-

tiating the perfect deal upfront.

me that, thanks to this kind of partnering, he spends

a quarter of his time each week reflecting on what

he’s learned. U.S. COOs might spend one percent of

their time on this, because they don’t yet see acceler-

ated learning as a competitive advantage.

Old style companies can find all of this threatening.

“You mean we have to generate idea after idea?” But

that misses the point. Innovation is becoming more

like compound interest—you create an idea and

then you build on it the way Apple did with the iPod.

The first one is a platform, and then—bang, bang,

bang—you have successive modifications. They

keep on turning out something new, but it’s actually

incremental. It shows that they’ve learned how to

accelerate up that curve.

dialogue 13 Workplace

News& Views

Symbiot RecyclingReceptacle

When Gensler’s design was unveiled earlier this

year, Detroit Metro Airport’s new North Terminal

got front-page treatment in both of the city’s dailies.

They praised it for its clarity and dramatic use of nat-

ural light in its landside departure hall’s all-impor-

tant ticketing and security screening areas.

The teardown of an existing terminal and an adjoin-

ing hotel, necessary to clear the site for new construc-

tion, became a veritable recycling case study. Much

Detroit Metro Airport North Terminal

of the old structure will be reused in the new build-

ing. The mostly concrete structures were crushed

into gravel to be used for ramps and roadways. Reus-

able iron, stainless steel, and structural steel were

extracted from other parts of the two existing build-

ings. Habitat for Humanity will reuse the plumbing

fixtures.

“The design/delivery team embraced it immediate-

ly,” says Gensler design principal Bill Hartman. “It’s

a sign of how far these green practices have come

that they are almost taken for granted now.”

“It’s exciting to see sustainable design flow into the mainstream.”GENSLER DETROIT’S BILL HARTMAN

Sustainable design is clearly in Gensler’s DNA. In November, we won the U.S. Green Building Council’s annual Leadership Award. In that same spirit, designers across the firm are looking for ways to apply sustainable principles to projects big and small.

Recycling in Chicago is about to become hip, very hip.

To help strengthen the City of Chicago’s Blue Bag Recycling Program, the American

Institute of Architects’ Chicago Chapter held a design competition for a functional,

attractive, and easily maintained recycling receptacle. They wanted something that could

be implemented quickly, so it had to incorporate the City’s existing trash containers.

Gensler’s Mark Schwamel teamed up with three colleagues to design the Symbiot, a

competition finalist that’s being actively considered by Chicago for a citywide rollout.

The name comes from symbiosis—dissimilar things that benefit from getting together.

That would be garbage and recycling, he explains.

“The main design issue was how to make something that’s filled with garbage look

appealing,” Schwamel adds. Symbiot’s eye-catching perforated stainless steel wrapper

allows for ventilation, to keep the trash dry. Separate containers accept recyclable glass/

metal, paper, and plastics. Waste that can’t be reused goes in the open bin.

Symbiot was featured at Live Green, an event at the Chicago Architecture Foundation

that showcases sustainable products. The City has also asked Schwamel and his team to

design a smaller variant, Symbiot Jr., that’s ideal for those crowded street corners.

dialogue 13 Workplace

Melrose to MainstreamONE THOUSAND STEPS

Pacific Sunwear’s new mall-based shoes and acces-

sories store, One Thousand Steps, targets men and

women aged 20 to 25. An entirely new approach to

mall retail, the Gensler-designed store offers an

edited selection of denim friendly, fashion-forward

merchandise in a modern and sophisticated set-

ting—“Melrose to Mainstream,” as PacSun presi-

dent Tom Kennedy calls it. The store is designed to

make customers feel connected to the space and to

the newly created brand (named for an out-of-the-

way beach favored by the locals in Laguna, CA). From

the expansive glass storefront to its cubby wall at the

back, customers are immersed in One Thousand

Steps’ new twist on the mall shopping experience. A

glowing white orb at the center entices them deeper

into the store. Front and rear, a display/storage sys-

tem highlights the shoes and accessories. Instead of

running to the stockroom, sales associates can stay

on the sales floor. Watching them get shoes and ac-

cessories from the display cabinets “is a kind of the-

ater for customers,” says Gensler’s Ted Jacobs, who

led the design. “By shrinking the stockroom, we also

enlarged the sales area to two-thirds of the store.”

One Thousand Steps has just opened its first wave of

stores in six U.S. states, with another 600-800 stores

in the pipeline.

Beauty Finds HerPied-à-terreEBEL PARIS RETAIL STORE

Ebel Paris still makes house calls. The popular cos-

metics and skincare brand got its start by taking its

expertise in beauty on the road. It built up a huge fol-

lowing thanks to door-to-door consultants and its bril-

liant reputation as cosmetic chemists. Women across

Latin America love the personal care and sophisticat-

ed products that Ebel Paris offers. So, when Gensler

was asked to give the brand a retail presence, the de-

sign team knew that a modern aesthetic— cosmopoli-

tan, with a Parisian twist—was the right look. In San

Juan, Puerto Rico (right) and four other cities, the new

store mixes in the one-to-one service that’s a hallmark

of Ebel Paris with its clientele.

Rollin’ Out The BluesHOUSE OF BLUES

Founded on Thanksgiving Day 1992, House of Blues

celebrates live music and Southern cooking. Their

first location was a real house in Cambridge, MA—

hence their name. Today, House of Blues’ venues

range from small clubs to amphitheaters and arenas.

The latest four, all designed by Gensler, are opening

or underway across the U.S. The first, HOB Atlantic

City (left), remodeled an outdated casino in the

“Streamline” style of the thirties and forties, complete

with a 2,000-person music hall, a restaurant, night-

club, and rooms for poker and gaming. On the hori-

zon is HOB Dallas, which will convert a twenties-era

loft building, preserving its industrial motif—heavy

timbers, exposed masonry walls, and a rooftop water

tower. Like Atlantic City, Dallas will include a mem-

bers-only Foundation Room, HOB’s “one true path

to Nirvana,” with its own dining room, lounge, and

themed suites for small, private gatherings. Next up

for music lovers are HOBs in Houston and Seattle.

News & Views

dialogue 13 Workplace

Gensler’s Steve Meier and furniture-maker HBF

continue their winning ways, scooping a 2006 Best

of NeoCon Gold Award for an occasional table se-

ries that extends an office furniture line (which also

won Gold in 2004). While the new LOGICmeet tables

garnered the jury’s honors, it was the new Dialogue

workplace lounge chair that got NeoCon buzzing.

Instead of the complex gadgetry that typifies this

News & Views

“Making a statement by not making a statement.”GENSLER CHICAGO’S STEVE MEIER

type of furniture, Meier and HBF came up with a

simple, classic piece, well suited to the informal

gatherings so characteristic of modern office life.

Sleek and scoop-shaped, it emulates the organic look

pioneered by designers like Bertoia and Arne Jacob-

sen. Dialogue combines ergonomic sophistication

with sculptural beauty, Meier says. “It’s a relaxed

chair that’s perfect for creative work.”

Hosting Super Bowl XL, the City of

Detroit needed a fast, inexpensive

way to make its steadily reviving

downtown an even more inviting set-

ting for an expected 125,000 fans.

Ford Field sits among new City-built

parks and promenades, but its imme-

diate environs include still-vacant

retail storefronts. To transform

them, the City enlisted the help of

the Downtown Detroit Partnership

and the local building community.

Gensler Detroit took on one such

street-front, teaming up with Turner

Construction. Together, the team

created a tapestry of brightly colored

shutters that, spanning seven win-

dows, spelled out DETROIT for the

passing fans. It also caught the eye of

the three thousand or so journalists,

in town to cover the big game. When

viewers back home saw the city, its

vitality is what registered. That’s the

message Detroit needed to convey.

Downtown MakeoverDETROIT WINDOWS PROGRAM, SUPER BOWL XL

Honors & BuzzHBF’s LOGICmeet & DIALOGUE

dialogue 13 Workplace

Symmetry of KnowledgeFor Jill Goebel and Elizabeth Riordan, exploration is the heart of design.

Design is often described as problem-solving,

but our work is really focused on helping our cli-

ents prepare for a future they can imagine but

not fully predict. The process is best described as

a dialogue, but when a strategist and a designer

are both involved, something magic happens. Its

source is ultimately the client’s vision and leader-

ship. We take their ideas, expressed in business

terms, and give them form.

These conversations open up a window into a

client’s business strategy, brand identity, and cul-

tural personality. Summarizing what we learn and

then commenting on it gives them the opportunity

to see themselves and their issues from a differ-

ent perspective. We’re not there just to clarify their

needs, but equally to understand their aspirations.

Of course, not every client is ready for this kind of

process. It’s when companies are facing a major

transition that we find they are particularly primed

to embrace other changes.

The Corporate Executive Board, a current client,

is a terrific example. Prompted by their leasing of

a 625,000-square-foot headquarters, CEB realized

that its design posed a remarkable opportunity

to grow their business and sustain their culture.

To get there, CEB asked us to spend a significant

amount of time observing their current work-

place—and then share what we learned with them.

Before we began, CEB also briefed us thorough-

ly on the factors that drive their business. This

knowledge was invaluable to us in making our as-

sessment. When we sat down with CEB to discuss

our findings, we were speaking the same language,

grounded in the expectations that this engaged

and reflective company brings to any discussion

of their workforce and workplace. Without that

shared understanding, it would be almost impos-

sible to translate their plans and strategies into a

workplace that could support them effectively.

The ideal in any creative process is to achieve sym-

metry of knowledge between the client and the

design team. The knowledge we both gleaned from

these explorations clarified CEB’s expectations for

their new headquarters, informing our design ap-

proach to its work settings so that they can fully

reflect CEB’s strategic intent.

Jill Goebel (left) is a design director with Gensler’s

Northern Virginia office. Elizabeth Riordan is a strate-

gic consultant with Gensler in Washington, DC.

DESIGNER’S NOTEBOOK

Joe Aker © Aker/Zvonkovic: page 25, lower left

Benny Chan/Fotoworks: page 1; page 32

Christiaan de Bruijne: page 1; page 2-3; page 12, bottom left

Detroit Metro Airport staff photos (North Terminal

Redevelopment project): page 31

Hufton & Crow: page 1; page 5, middle; page 7; page 12, top;

page 18-19; page 20

Priska Ketterer: page 25, lower right

Nic Lehoux: page 6, middle

Michelle Litvin: page 8; page 9, right

Roger Mastroianni: page 33, top

Joy McElroy, Gensler: page 35, top

Nick Merrick/Hedrich Blessing: page 5, right

Michael Moran: page 6, left

Nacasa & Partners, Inc./Atsushi Nakamichi: page 5, left;

page 6, right

Brian Pobuda/Gensler: page 36; page 35, bottom left

Scott Shigley: page 4; page 25, top

Timothy Soar: page 12, bottom right

Sherman Takata/Gensler: Cover; page 1; page 9, left;

page 12, bottom middle

Widner Creative: page 34; page 35, right

Adrian Wilson: page 9, middle

Toshi Yoshimi: page 22

Editor

John Parman

Art Director

Jane Brown

Designers

Peiti Chia

Mark Jones

Photo Editor

Brian Pobuda

Managing Editor

Erin Luckiesh

Production Manager

John Burger

Web Designer

Jonathan Skolnick

Contributors

Alessandra Almeida

Lisa Beazley

Andrew Blum

Kate Kirkpatrick

Jan Lakin

Jonathan Littman

Barbara McCarthy

Rupal Shah

David Sokol

Editorial Board

Andy Cohen

Art Gensler

David Gensler

Diane Hoskins

Robin Klehr Avia

Director of

Communications

Mark Coleman

Dialogue thanks the following Gensler practice leaders for their help with this issue:

BUILDINGS & CAMPUSES

Stephen Andrews, London (44-20-7330-9876, stephen_andrews@gensler.com)

CONSULTING

Loree Goffigon, Los Angeles (1-310-449-5702, loree_goffigon@gensler.com)

Elizabeth Riordan, Washington, DC (1-202-721-5278, elizabeth_riordan@gensler.com)

WORKPLACE

Barbara Dunn, Los Angeles (1-310-449-5617, barbara_dunn@gensler.com)

Jill Goebel, Arlington (1-703-248-7981, jill_goebel@gensler.com)

Nila Leiserowitz, Los Angeles (1-310-449-5813, nila_leiserowitz@gensler.com)

Donna Schroeder, Chicago (1-312-577-7146, donna_schroeder@gensler.com)

Gervais Tompkin, San Francisco (1-415-836-4224, gervais_tompkin@gensler.com)

Tom Vecchione, New York (1-212-492-1579, tom_vecchione@gensler.com)

Gary Wheeler, London (44-20-7330-9633, gary_wheeler@gensler.com)

Jim Williamson, Washington, DC (1-202-721-5244, jim_williamson@gensler.com)

Ed Wood, New York (1-212-492-1522, edward_wood@gensler.com)

Doug Zucker, San Francisco (1-415-836-4242, doug_zucker@gensler.com)

http://dialogue.gensler.com

Dialogue now has a parallel Web edition—dialogue.gensler.com—from which articles can

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archive of past issues, so check it out and subscribe!

Gensler is a leading architecture, design, planning, and consulting firm, with offices in the

Americas, East Asia, and Europe. Dialogue magazine, published twice yearly, focuses on

design’s ability to transform organizations and improve people’s lives.

Dialogue is produced by Gensler Publications. © 2006 Gensler. To comment or request

copies of the print edition, please write us (dialogue@gensler.com).

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