Q&A

James A. Bacon


 

Building 14
The crucible of innovation in corporate real estate is a non-descript office building in San Jose, Calif. Inside, Mark Golan is redefining the relationship between worker and work space.


 

Mark Golan is a thought leader in re-envisioning the workplace. A vice president of worldwide real estate and workplace resources for Cisco Systems, he was recently appointed chairman of CoreNet Global, a professional association of corporate real estate executives. At Cisco, he manages about 160 employees and oversees 17 million square feet around the world. His objectives: cut costs, enhance productivity and boost employee satisfaction. Cisco’s renowned Building 14, in San Jose, Calif., functions not only as Golan’s center of operations but a living lab for his ideas. “Network of Space” spoke to him in early December.

Network of Space: What does Workplace Resources do?

MG: The purpose of WPR is to acquire space, manage the services that take place, handle the construction, build what needs to be built. It also entails the design of the work environment. When you talk about the work environment, you have an impact on worker productivity and the company’s culture. That needs to be thought through pretty carefully.

NoS: How do you view the changing nature of work? You’ve said elsewhere that it’s more “collaborative” and “untethered.” Please elaborate.

MG: The nature of work has changed over the past 30-plus years from the typical office, where people are heads down all day long, to where it’s predominantly collaborative: people interacting with people in different ways. Today, most work is collaborative or done on the run. People spend most of their day in meetings. They rarely have the chance to sit down and do e-mail or voice mail. They do it in the car, off BlackBerries, inside the little white spaces in their schedules.

Our infrastructure [at Cisco] is our laptop and web-enabled applications. Connectivity is everywhere for us. We’re 100-percent wireless within the campus. Every employee, bar none, has a wireless set up at the house. We pay for broadband. As long as you have that laptop and connectivity, it doesn’t make a bit of difference if you’re sitting at your couch at home or in the office.

NoS: How does the new style of work affect the way you design offices?

MG: If you were an office designer 30 or 40 years ago, and you were told that 80 percent of the time an individual would be sitting by themselves, and to be productive they needed all these physical things – phone lines, typewriters, copying machines, secretaries -- it made total sense to design offices in cubes.

The problem is the technology and nature of work have changed but the work environment hasn’t. Offices are very poorly utilized. I’m talking true utilization, not seat assignment. The metric used in corporate real estate has been the wrong one. You can say a building was 100 percent occupied – but you really mean it was 100 percent assigned. When you measure utilization, the metrics are pretty abysmal. We find that utilization runs about 40 percent in a 100-percent occupied building.

Traditional offices dedicate 70 percent of their space to cubes. Today, the cubes are mostly empty while people fight over conference rooms because there’s not nearly enough collaborative space. The work environment is very broken. For most companies the second-largest operating expense after salaries is real estate. Real estate is the longest long-term asset on the balance sheet. To say it’s being utilized at 40 percent is an amazing statement. It’s an enormous area of waste.

Even more importantly, [outmoded offices breed] active resistance to the kinds of behaviors you’re trying to promote. Every company talks about the important of collaboration and teamwork. They’ll have big meetings to talk about this – then everyone disperses to their offices and cubes to make sure it never happens. Not only are you wasting a lot of money, you’re damaging working productivity.

NoS: If everyone has laptops, cell phones and Virtual Private Networks – if everyone is untethered, as you say – why have central offices at all?

MG: Why do people come to work still? That’s a question that needs to be asked more than it is. When I ask that question of people, I generally get two answers. One is, they say. “I need to go to meetings.” There’s an underlying assumption that interactions are best done face to face. The other thing is, “I need to socialize.” People don’t like to feel isolated. They want to feel like part of the team and the company. Those social interactions foster trust, understanding and belongingness. They’re done best face to face. We haven’t reached the point where social relationships can be developed at a distance.

Ask people what their most notable experiences in a work setting – they’ll oftentimes describe some scenario where they were given a ridiculous task, banded together and worked insane hours. There was no work-life balance. It was everything you’d think would make them miserable. But they remember it fondly because they banded together as a group and collectively brought this thing down. That ultimately becomes fun.

People complain that work isn’t “fun”. We often misconstrue what that means – more beer parties on Friday afternoon. That can help. But a fun job is one where you feel empowered, you’re in a very social environment, you’re learning from your colleagues, you’re working together to accomplish something.

NoS: So, you think there are limits to which technology can overcome the human instinct for face-to-face interactions?

MG: There probably are limits but I don’t think we’re there yet. Any time a company has attempted to virtualize their organization, that has led to a mercenary corporate culture. People feel no loyalty or connection to the team. We are inherently social beings. We were evolutionarily designed that way. We have to think long and hard before we break that down too much.

But norms are changing. You’re seeing changes between the generations. People are coming of an age today who only knew a world with computers, with Instant Messaging. How they interact with one another is very different from how the baby boomers interact. They’re more used to holding three conversations simultaneously with each other through IM. They’ll be more able to foster concepts of belongingness over distance. But I’m still skeptical that we’re all the way there. We’re programmed and conditioned as human beings to socially interact.

We’re working at Cisco with “tele-presence” – extremely high-end video conferencing. Picture sitting at a circular conference table. You’re sitting on one side of the table. On the other side are large plasma screens with images that blend into the table – it looks like you’re all sitting at the same table. The people are full-size, high-def. You can make eye contact. You hear directional sound. They’re looking at you and vice versa. Real motion, real time. Psychologically, if someone asked you a day later if you were in the physical presence of someone, what would you say? Emotionally, it was almost like a face-to-face. That kind of technology will help tear down some of the barriers to distance cooperation. What you don’t get: You can’t go to lunch with people after the meeting. There are no spontaneous, unstructured interactions.

Maybe bandwidth will be so cheap one day that we’ll be able to talk to each other all day like we’re in the same room. I can envision a world where that starts to happen.

NoS: You often speak of the 70 percent/30 percent ratio of collaborative work to individual work. Where do you get that number? Is that just Cisco?

MG: It’s more an aggregate of peoples’ office environments. It applies most to office/sales/administrative workers. There are exceptions: When you’re talking about engineers, you’re talking about different work practices. When you’re talking about software designers, they sit down for hours and write code.

The more senior you get, the more you become a manager. A culture of status has built up around space that runs completely counter to workplace realities. The people who are given the most dedicated space – executives – are the ones who need it least. At a certain level in the organization, all you do is attend meetings.

At Building 14, I get no dedicated space of any kind. I like to make an analogy with your home. You don’t go home to a cube. You go to a multi-functional environment. You move around in that environment and use it appropriately. Sometimes you’re with your family, sometimes you’re with friends, sometimes you’re by yourself. Sometimes you’re in the kitchen, sometimes in the family room. It’s unstructured. It can be done on the fly. Now, port that process to the workplace. The family becomes the group of people you have to work with. It can easily span organizational lines. It allows a lot of flexibility. If the people you work with change, you change the physical clustering. You don’t have to ask anyone’s permission. You just choose another place.

That’s how we’ve been operating for three years now. When you do that, you eliminate all the wasted space. You take some of the [cubicle] space and apply it to the collaborative zones. The other thing you do is shrink the space and save money. You get a win-win.

NoS: How successfully have you migrated that experience in Building 14 throughout the rest of Cisco?

MG: It’s been a slow roll out. Our idea has been to prove the concepts… create prototypes… nail down the solution before we scale it. At this point, we’ve got ten or twelve of these environments through the [Cisco real estate] portfolio. Some of these solutions are pretty well baked. Now we’re looking to scale some of them. In some areas, they’re clearly appropriate. In other areas, they still need some work. If we’re working with a Human Resources group, where people meet privately and sometimes break down in tears, we might design an environment with some hard-wall spaces. We’d go with what’s appropriate for that group.

We will not deploy space for status. If someone wants to deploy space for status, we present them with the price tag for that. If someone can make a good enough case – the only way can get some talent is by having a private office – we’ll do it. But they’ll have to add the cost of office space into their decision making.

NoS: You say that companies are wasting more than 60 percent of their space. Corporate America is “over officed,” is it not?

MG: Most companies that have studied utilization have found that their utilization rates are poor. The rate will vary from place to place. This is not a one-size-fits-all proposition. Each company has to make its own realistic assessment. But the metrics used in the past were the wrong metrics. Almost everyone who comes through Building 14 smiles and nods their heads. They say the same thing: Their offices and cubes are empty and their conference rooms are booked.

Generically, people stopped thinking about the work environment a long time ago. They need to rethink it. The cost and productivity costs are pretty high.

NoS: How does Cisco measure utilization?

MG: It’s still a manual process. We’ve looked at a lot of automated ways. We can do things like use wireless access points to triangulate where someone is, with resolution within 25 to 30 feet. That tells you if they’re in a given sector. But it doesn’t help if you want to know exactly what they’re doing, or the technology they’re using. If you want to know to know what people are doing real time, you have to track them second by second. We did a pilot [project] with ultra wide band, a form of RFI. We deployed the sensors. People wore the badges – they’re not small. It’s a little trickier than people think. We had power management problems. We got interference near metal objects, like blinds and white boards – people would walk into these ghost zones. I have yet to see a really robust, scalable solution that allows you to track folks at a high level of granularity.

Another problem with automating utilization is you run into privacy issues. People don’t want to be tracked at that level. You literally know, “Oh, they just went to the rest room.” People aren’t comfortable with that. In Europe, you’d be violating laws.

There are other ways of measuring utilization. You can track people going in and out of points of entry. The problem with just using badge data is that you run into tailgating -- 30 to 40 percent of the people who enter the building tailgate in – they come in at the same time. Three people get to the door at the same time, they know each other, they just walk in.

Is measuring utilization doable? Yeah, it’s doable. If you put a gun to my head and gave me enough people and money, could I get a system into place that was working? Yeah, I think I could. Would it be cost effective? Not with what we have today. But there are some technologies we’re looking at pretty hard.

One day, I can see you walking up to a desk in room – say, an audio privacy room. The room knows it’s you. It changes the lighting levels to how you like it, adjust the temperature and puts pictures of your kids on the plasma screen. When you leave, the room automatically re-sets for the next person. [With that kind of technology], we could pull up a map of the floor plan and see where your dot is. I don’t need to know what person is associated with that dot and what group they’re with – what we really want is the utilization statistics. Gather the information you need without identifying the individual.

NoS: Last question, Mark, how well have you done in Building 14 getting your utilization under control?

MG: Building 14 has about 25,000 square feet. It was designed for 88 spaces. We took occupancy at 140, and the number now is roughly 160. But the number is constantly changing – we’re not sure exactly how many people are using it. When are you out of space? It’s not black and white any more. As you add more and more people, it gets tighter and tighter. It gets harder to find the kind of environment you need when you want it. At some point it gets intolerable. But it’s a gradual process.

Right now we’re running at about a two-to-one ratio compared to what the building was designed for.

NoS: Many thanks for your time.


-- February 5, 2007

 

 

 

 

 

 

 

 

 

 

About these Interviews

 

As editor of "Network of Space," an electronic newsletter published by AgilQuest Corporation, I have conducted Q&As with a number of leading visionaries in the commercial real estate sector. In each of these interviews, we explored the impact of mobile technology and the mobile workforce on the real estate sector.

 

With the permission of AgilQuest, I have re- published those Q&As on Bacon's Rebellion for the benefit of economic developers, local govern- ment practitioners and anyone else interested in future patterns of real estate development.

 


 

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