Why Your Inner Circle Should Stay Small, and How to Shrink It

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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 restrooms 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.

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.  In the old building, six teams of “merchandisers,” tasked with sourcing and marketing flash deals for various product categories (including electronics, baby, and fashion) 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.  They were also very similar to those in the previous headquarters and employees had no choice about where they sat.

Looking at 38,435 deals executed by 60 merchandisers in the 120 days before the move and 80 days afterward, Lee found that merchandisers in the area containing more teams sourced 25 percent 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...

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