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FACE-TO-FACE COMMUNICATIONS:
Press the flesh, not
the keyboard
In a wired world, physical presence counts more
than ever
From “The Economist,” August
24, 2002
As a young man in the City of
London, recalls Sir Martin Sorell, boss of WPP,
a marketing group, he
was struck by the magnificence of the partners’ room
at Hambro’s. The bank’s top brass sat
in a vast hall above Bishopsgate, surrounded by their
aides. “There was a lot of noise,” he
says,” but everybody knew what everyone else
was doing.” The newish mayor of New York, Michael Bloomberg,
began his working life as a trader for Salomon Brothers,
and has recreated something similar in his office
in City Hall. Officials work in cubicles within a
giant, open bull-pen, rather than in private offices.
Again, the aim is to free the flow of information.
The inevitable conclusion: seeing other people in
the flesh is a different, and sometimes better, way
to make sure that news and views flow freely than
anything that electronics can offer.
One of the mysteries of the wired
(and wireless) world is that proximity still counts.
In spite of
September 11th, and the predictions that everyone
would travel less and have fewer meetings, people
still want to gather to do deals, to drum up new
ideas and to court customers. Indeed, in some ways,
physical presence counts even more than it used to.
Tony Venables, an economist at the London School
of Economics, believes that businesses that thrive
on face-to-face communications — or what some
call F2F — now account for a growing share
of economic activity.
Of course, the arrival of the Internet and of cheap
long-distance telecommunications means that lost
of activities that once required physical presence
can now be conducted online. Customers can pay a
bill, book a hotel room or place a bet without walking
to the bank, travel agent or bookie. The fall in
the costs of undertaking such routine transactions
has allowed companies to move them out of expensive
city centres to cheaper locations.
But other kinds of business seem
to need proximity more, not less, these days. Look
at the way the venture
capitalists who financed the Internet boom huddle
together along Sand Hill Road in Palo Alto; or the
clustering of media folk along New York’s Avenue
of the Americas. “If you are doing a multi-million-pound
deal, you need to eyeball them,” says Dame
Judith Mayhew, chairman of the policy committee of
the Corporation of London. “You don’t
do that down the line.”
Cities are still highly efficient ways
to ensure that eyeballers can see each other. Some
trades seem
to thrive on density. In a paper recently published
by the National Bureau of Economic Research, Sukkoo
Kim points out that 40 per cent of American employment
is packed into 1.5 per cent of its land area. Those
cities that
specialise in some services — notably finance,
insurance, property dealing and wholesale trade — have
tended
to pack more and more workers on to the same land,
he argues, unlike those that specialise in services
such as public administration or retailing.
Why might that be true? Michael
Storper of the University of California, Los Angeles,
has written a paper with
Mr. Venables on “Buzz: The Economic Force of
the City”. They argue that cities are where
information and ideas are developed and swapped.
But not all information is equal. Some (a bank statement,
say, or a booking) are easily codified and electronically
swapped: while some (“I have a deal for you”,
"Why don’t we do it this way.”)
require context and trust to be meaningful. It is
the second
kind of information that requires F2F.
As a result, many activities are bifurcating. Hollywood
film-shooting is continuing to move out of town,
for instance, while deal-making, which requires trust
and lots of parties, stays in town. And this split
does not apply merely to the movie world. Much American
manufacturing is going to small and mid-sized cities
inland. A typical beneficiary is Memphis, where Federal
Express has its hub. The deal-making and design tends
to remain in the big cities of the two coasts.
For individual companies, the
key question is when and how to bring people together.
Companies with
lots of outlets need to keep branch staff in touch
with head-office staff. One company that works hard
at this is Wal-Mart. The retailer’s founder,
Sam Walton, spent much of his time tramping round
the company’s stores. Nowadays, regional and
district managers spend four days a week on the road,
listening to what store workers are saying.
Even a company such as Oracle,
which tries to do as much as possible electronically,
finds that it
needs regular face-to-face contact. Jim Flynn, its
head of corporate communications, brings his regional
staff together once a quarter. “It’s
the only way to work through complicated co-ordination
issues,” he says. Moreover, in a global business
with different national thresholds for irony and
humour, and with English widely spoken as a second
language, the Internet can breed misunderstandings
if not backed up with regular meetings.
For companies whose lifeblood is creativity, personal
contact matters even more. Silicon Valley was born
from long nights spent drinking in the now-defunct
Wagon Wheel bar in Mountain View, California, where
the early geeks and semi-conductor executives thrashed
out technical glitches together over beers. Big pharmaceutical
companies struggle to build into their bureaucracies
the sparky communal brainstorming that creates breakthroughs.
According to Louise Redmond, head of organization
effectiveness at GlaxoSmithKline (GSK), recent meetings
of staff from around the world have revealed gaps
in research programmes that would otherwise have
gone unnoticed. She says that GSK has increasingly
tried to cluster teams working on a particular project
on the same physical site.
The need to put the right people
together also feeds into office design. At WPP,
Sir Martin says, “we’re
blowing out walls and creating coffee areas.” No
longer are accountants and media people assigned
to separate floors. Instead, they work side by side
in teams to ensure that they keep talking to each
other.
As companies try to get more
staff to work on the road from home, they lose
the water-cooler conversations
that sometimes spark useful ideas. Margaret Exley,
chairman of Mercer Delta, a consultancy, argues that
some employees, especially in customer services,
rarely see their boss’s face, even for a performance
appraisal. Some sales teams get round this by having
regular meetings on the road. One beneficiary of
this trend is Starbucks, a coffee chain that is increasingly
used as a substitute office. Several stores have
even turned spare space into meeting rooms, according
to Howard Behar, Starbucks’ president for North
America.
Companies with scattered staff
also often try to bring them together in occasional
conferences — and
these have become much more intensive, carefully
planned affairs. That partly reflects a shortage
of corporate cash for jamborees. Ed Griffin, head
of Meeting Professionals International, a trade association
of meetings planners, says dolefully that finance
executives have recently taken over responsibility
for meetings budgets from sales and marketing departments.
He worries that they may not grasp the extent to
which a well-run conference can motivate sales staff.
It is, he says, a matter of transmitting emotion,
not just facts: “If you do it on a television
screen, you lose 50 to 70 per cent of the ability
to create valuable relationships.” If he is
right, then companies will need to think even harder
in
future
about how to make those eyeballs count.
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