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From the March–April 2018 Issue

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When corporate workspaces are reorganized, many employees view the process as nothing but a nuisance. Desks are cleared, boxes are packed, daily work is disrupted—for what, exactly? Design firms have long touted the benefits of such changes, promising that when people are able to circulate more freely and to randomly encounter different sets of colleagues, they’re more communicative, collaborative, and creative. Some managers believe that too: When Steve Jobs was planning a new headquarters for Pixar, he famously located the large central bathrooms in the building’s atrium, requiring employees to walk some distance to use the facilities—but creating unplanned “collisions” meant to spark innovation. Dozens of research studies have backed up these contentions. But the financial return on investment for office reconfigurations has been hard to prove—until now.

Kuo Cheng Liao

Sunkee Lee, a professor at Carnegie Mellon University, happened upon a “natural experiment” at a large South Korean e-commerce company that was moving into new headquarters. (The company requested anonymity.) In the old building, six teams of “merchandisers,” tasked with sourcing and marketing flash deals for various product categories (electronics, baby, fashion, and so on) were seated in one area, while six other merchandiser teams sat in another one; the two groups were separated by a common entrance. Although the company wanted all the teams together in the new location, space constraints meant that nine of them were situated in one open area and three in another, with a common entrance in between. The two spaces were identical in terms of decoration, lighting, equipment, distances between teams and workstations, and proximity to management, and they were very similar to those in the previous headquarters. Employees had no choice about where they sat.

Looking at 38,435 deals executed by 60 merchandisers over 200 days—120 days before the move and 80 days after—Lee found that merchandisers in the area containing more teams sourced 25% more deals from new suppliers, on average, than all merchandisers had sourced before the move. The deals weren’t the result of collaboration; they marked a change in the quality of people’s work. Lee characterizes that change as a shift from “exploitation” (simply repeating offers that worked in the past) to “exploration” (coming up with new ideas). Perhaps more important, the daily deal revenue of each merchandiser sitting with previously unfamiliar colleagues was, on average, 40% higher ($16,510 a day) than the merchandisers’ premove average.

Multicoloured Casual Attitude Attitude RENDA Casual Multicoloured RENDA qgw7Pf by Sunkee Lee (working paper)
A version of this article appeared in the March–April 2018 issue (pp.22–24) of Harvard Business Review.
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  • Tathagat Yagnik adidas Red Squadra White 17 Originals 6 months ago

    Interesting Topic. However, I have noticed that even when organisations provide free seating arrangement, over time people settle in their own comfortable spots. However, I agree with the author that return on such activity is not worth the effort. There should be other cheaper ways to create unplanned collisions.

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