Management: How to put good heads together

IT IS hardly earth-shattering to claim that where you hang out, and with whom, will determine much of your destiny. 'Where you stand depends on where you sit,' goes the adage. That said, it is surprising that most managers fail to give physical factors their strategic due. It's a blunder.

Put the following space management issues atop your agenda and you can initiate dramatic changes in corporate culture almost overnight:

Encourage interaction: a new facility in Austin, Texas, is home to 3M's electronics sector. The huge space was designed so that walking from any point to another takes less than five minutes. Seating areas called 'interactive nodes', complete with chalkboards, are strategically placed near washrooms.

Such approaches have led to many productive chance encounters among people from disparate functions.

The British creative marketing agency Imagination fosters social and professional interaction with a central atrium and a cheery ground- floor canteen where workers and clients chat cafe-style throughout the day.

Co-locate functions: Playmobil, the German toymaker, spent dollars 30m on a new headquarters with one primary objective - bringing together designers and precision mould makers who had been in different towns. When the building opened, constant face-to-face exchange replaced sporadic phone calls and memos. Steelcase, the office furniture manufacturer, moved into a dollars 111m corporate development centre four years ago that is in itself a strategic weapon. By grouping 575 designers, engineers, marketing and purchasing staff in multidisciplinary teams, Steelcase has halved its product-development time. Team work areas are felicitously called 'neighbourhoods'.

Live with the client: three in four of the more than 70,000 employees of EDS work on, or within hailing distance of, client premises. It is roughly the same with the several thousand consultants of McKinsey, and the architects at CRSS of Houston, who have developed routines for living and working with clients during key phases of their projects.

Put everything up for grabs: open offices with low walls are one thing; open organisations, where people gravitate freely to work with teammates for the day, week or month, are another. At Oticon, the Danish hearing-aid maker, project team members roll their personal carts to an agreed meeting spot. Fitch RS, a design firm in Ohio, is organised around a series of friendly free-form offices called 'pods'.

Root out headquarters hangers-on: Asea Brown Boveri runs a dollars 30bn enterprise from a sparsely populated building in Zurich. Thousands of headquarters staff were shipped out to small units around the world. Those who remain at the centre spend most of their time on the road. Corporation Europe, the computer science company, went further and eliminated its headquarters.

Keep your feet on the ground: the 100-storey Sears Tower in Chicago has been toppled, in effect, by mass merchandisers such as Wal-Mart and specialists The Limited. Is it a coincidence the two challengers operate from no-frills, two-storey offices? I think not. The atmosphere tends to be rarefied on the 50th or 60th floor.

Change your perspective: moving near the action can quickly alter corporate thinking. What you see outside the window determines strategy. That is why Southwestern Bell decided to shift its headquarters from St Louis to progressive San Antonio. Likewise, in the 1980s, Jack Smith, the General Motors chief executive, quickly established a new attitude in its European operations by moving its headquarters from an isolated site in rural Germany to cosmopolitan Zurich.

Create separate homes for independent units: the sense of camaraderie that comes from having your own facility is hard to over-estimate. Boss Ben Lytle split his financial services company, the Associated Group, into a series of small companies. Nothing was more important to their success, he said, than putting each one into its own building. Richard Branson of Virgin Group also divides companies when they reach 50 or so people, and establishes the new operation in a different location.

'It's still typical to view offices as information factories or places that produce data,' the designer Duncan Sutherland told Industry Week magazine. 'But the purpose of an office is to create knowledge. That is an intellectual process, not a production process.' Make no mistake, creative space management, from the mundane to the grand, is corporate strategy.

1993 TPG Communications