Special to the Business Journal
Today’s economy has clearly shown favoritism to the high-tech sector with
much of the focus on the Internet.
Millionaires are made by the dozens as IPOs shoot for the stars, taking the Internet company founders with them.
So fast are these companies taking off there seems to be little thought of how to steer the beast once it has been created. I continually hear complaints from these rising stars about not finding enough skilled personnel, that they can’t plan more than six months in advance.
Finally, when they are able to find the right people, there is no space available to put them because they couldn’t plan more than six months in advance.
When a company expands faster than the walls that bound it, there needs to be flexibility in the “bricks and mortar” in order to accommodate its needs.
Moving the bricks is much more difficult than moving the company. So instead, the question should be: How does the company create flexibility without losing consistency?
– Separating Parts
From The Whole
The answer may lie in a term called object oriented management, which has been coined by Fred Lins, CEO of a small technology firm located in Honolulu.
The premise behind object oriented management is that a hierarchical company as a whole moves much slower than the sum of its parts. If companies can elevate themselves from the staid functions and create a flatter design, then there is a possibility for growth unfettered by structural constraints.
Lins states, “If you think of parts of the company as entrepreneurial entities and separate them as stand-alone, function-based entities, such as sales, human resources, production, etc. then you will enable quicker response to problematic situations since the relevant parts of an organization are closer to their respective customers, which may be internal or external.”
The idea is to segregate functionality from the hierarchy and the physical organization and either outsource the functions to companies that specialize in certain areas, such as real estate, or recreate the organization into semi-autonomous centers that communicate via a standard communications protocol. Either action may enable greater efficiency through locally controlled adaptation and result in more time for the employees and managers of the respective units.
I would like to add to Lins’ idea as it relates to a company’s real estate requirements.
– High-Growth Vs.
Low-Growth Divisions
The idea is to separate organizational functions into two groups: high-growth divisions and low-growth divisions. The high-growth divisions can be put into space that allows for greater expansion without being tied to cumbersome, slower growth divisions. The slower growth divisions can then be placed in space that is closer to the actual requirement for those divisions.
With today’s technology, connecting divisions in separate buildings is just as plausible as connecting divisions in the same building.
The way to look at this is that it is no different than connecting PCs to your cable network. The servers are co-located with their functional divisions such as the executive branch, upper management, distribution, human resources and sales. These are typically the slower growth divisions that can be highly to moderately predictable when it comes to expansion needs. Placing this group in one building allows for the company to pay only for what it requires today and up to five years out.
The terminal ends of the organizational network represent the programmers, customer service, software engineers, technical support, etc. These areas are constantly changing and shifting and require the most flexibility.
Placing these people in buildings with relatively short-term leases allows for more flexibility by leaving greater room for expansion, not being tied to longer terms, thereby enabling a move, or by creating greater options because not as much space is required since the slower growth division isn’t a part of the equation.
The arrival of modern network technologies including Storage Area Networks, Wide Area Networks based on broadband components such as Road Runner cable, Integrated Data Services Networks, Asymmetric Digital Subscriber Lines and the like enable the organization to distribute its divisional servers and their onboard databases with minimal regard to location. The most promising is the optical network which can transmit voice, data and video traffic over fiber cables using light streams by delivering huge amounts of bandwidth and virtually eliminating network delays.
– Organizing Divisions
For Improved Efficiency
The premise moves beyond the idea of telecommuting. In a sense, it is somewhat in-between telecommuting and “whole” housing. It enables the possibility of placing a programming division closer to where the pools of employees live, which many times are not where the executive division lives.
It also allows the continuance of collaboration that companies want to promote within divisions. Weighing the cost vs. benefit of such a plan is different for each company.
The cost potentially creates space inefficiencies typically found when not housing everyone together as well as potentially higher lease rates for shorter terms. The benefit allows better productivity since driving in traffic is reduced, constant moving isn’t taking place for the company, as a whole, and old leases are not being paid for until relinquished through subleasing or disposition.
In addition, the high-growth divisions can be designed more creatively than would be reflective of the slow-growth divisions, allowing for higher enjoyment of the workplace and better employee retention since these same people are typically in a high-demand field of work.
If all of this seems too unbelievable, I would heed the words of James O’Donnell, vice provost of IS and computing at the University of Pennsylvania in Philadelphia, who says, “When India is zero distance away in terms of data, there are a lot of things you can do, like hiring the experts you need without knowing or caring where in the world they’re located.”
After all, call centers already are becoming location-independent.
– Achieving A New
Way Of Thinking
Understandably, for any new idea to be adopted there must be a change in the thinking of the top personnel. Giving up tight control, having to travel between locations, and creating a new model of protocol are some of the new ways of thinking that must be realized.
For those “rising stars” that are just beginning, this may be easier to instill than for those companies whose protocol is already in place. I believe, though, that what matters most is how a company can consistently increase their stakeholder value.
Employees and real estate are typically looked at as a cost, i.e., employee cost per square foot or office space cost per square foot. The idea that I have suggested here as a method of company operation is one way to look at these costs and instead, recreate them to add greater value, and that’s the bottom line.
Wise is a real estate consultant/broker for the Equis Corp. of San Diego.
