As Cisco shows, bricks still
have a place in a networked
world
BY JONATHAN RABINOVITZ
Mercury News Staff Writer
Cisco Systems Inc. boasts about leading the ''Internet revolution,''
but its latest project -- a new campus in South San Jose -- is
evidence that workers at even the most virtual of companies need
to meet face to face in brick-and-mortar offices.
In fact, some experts think electronic communication is a
complement, not a substitute, for face-to-face contact. ''The types of interaction that benefit most
face to face are those you don't even realize you need to have,'' said Erik Brynjolfsson, a
management professor at the Massachusetts Institute of Technology. ''You get to talking to people
in an elevator or over lunch, and you come across new ways of looking at things.''
Kevin Kelly, author of ''New Rules for the New Economy,'' agreed, saying it was a mistake to
view the virtual office as a trade-off with the physical office. ''We're seeing the fusion of existing
face-to-face with the e-mail virtual culture,'' he said.
At Cisco, the Internet has already freed employees from the mundane tasks of taking sales orders,
allowing them to process purchasing requests with the push of a button and work with customers
across the globe. It is a new economy, the San Jose-based company says, in which deals transcend
time and place, borders are blurred and face-to-face contact has become less necessary.
Yet when push comes to shove, John Chambers, the company's chief executive officer, concedes
that to be competitive in today's economy, Cisco needs a lot of big buildings where its workers can
rub elbows over lunch.
Things move so quickly in the Internet economy, Chambers said recently, that marketers,
salespeople and engineers need to be able to meet at a moment's notice to react to the latest
changes. The best data networking companies, he added, had big central campuses, which ''allows
you to move at a speed that others do not.''
Physical foundation
The company's proposal to build a 7 million-square-foot campus in Coyote Valley underscores the
idea that Cisco and other businesses have embraced: A strong presence in cyberspace requires a
strong foundation in real space.
Amazon.com, for instance, moved late last year to expand its warehouse capacity. TBWA
Chiat/Day, an advertising agency, tried to create a ''virtual office'' in the mid-1990s and
encouraged people to work from outside, but ultimately abandoned the idea after discovering that
people wanted office space.
Still, some proponents of telecommuting question whether Cisco's expansion is the right way to go.
Jack Nilles, arguably the father of telecommuting and the man who coined the phrase, called
Cisco's proposal yet another example of the ''edifice complex.''
''Most up-and-coming companies, regardless of whether they're high tech, have an inferiority
complex when dealing with the corporate world,'' said Nilles, president of a Los Angeles-based
telecommuting consulting company, JALA International Inc. ''The best way to deal with that is to
have a bunch of large buildings with your name on it.''
Nilles maintained that Silicon Valley executives overrate the importance of hanging around the office
and eavesdropping about the latest breakthrough. Some tasks, like the thrashing out of complicated
new technical ideas, need to be done in person, he conceded, but many jobs can be done in
isolation and may even benefit from the added privacy.
It's unusual to hear such criticism of Cisco, which is generally hailed as one of the world's most
Internet-savvy businesses.
Almost three-fourths of Cisco's sales are conducted over its Web sites. It is on the forefront of
companies that do their bookkeeping in virtual time. And the company handles everything from job
applications to travel arrangements with its own networking systems.
Telecommute's impact
Other experts on the Internet-based work arrangements said it was a mistake to look at
telecommuting as a replacement for corporate campuses.
Telecommuting is ''really intended just as much to extend the work day,'' said Lou Pelosi, executive
director of marketing of Covad Communications Co. in Santa Clara, which specializes in providing
high-speed access for home offices for large corporations.
It allows people to work easily on weekends and at night, he noted. ''There's no way to get around
the need for face-to-face meetings.''
The best candidates for telecommuting are jobs that require set tasks and involve transmitting
clearly defined pieces of information, experts said. Ordering commodities over the Web does not
require personal contact the way that negotiating a billion-dollar real estate deal would.
Many of the employees at Cisco's proposed Coyote Valley campus would probably be engineers.
They would be working on designing the latest networking equipment, trying to puzzle out problems
that often have no established set of precedents.
Employees at a company that is trying to develop a new product or define a new category often
need a ''much higher bandwidth of communication'' than telecommuting now allows, MIT's
Brynjolfsson said.
The current technology of telecommuting does not allow for the give and take that such creative
work entails, he said.
In fact, electronic communication may lead to a greater need for direct contact.
The most intense telephone traffic is in cities, where daily contact is also the greatest, Brynjolfsson
pointed out. ''The more you have of one, oftentimes the more valuable the other becomes,'' he
said.
The exact balance, however, remains to be developed.
Hal Varian, dean of the UC-Berkeley School of Information Management and Systems, said the
value of face-to-face contact is still being debated.
Distributed development
Although some companies claim computer programs and chip design require coordination that
works best with ''real-time, face-to-face'' interaction, others note that distributed software
development, like Linux, has worked quite well, he said.
Some argue that the Linux operating system is largely a clone of the earlier Unix system that was
developed with face-to-face interaction. But Varian, who is co-author of ''Information Rules: A
Strategic Guide to the New Economy'' said there was also another possible explanation.
''We just haven't learned how to use the Internet effectively for coordination,'' Varian said.
A recent paper by Paul David, a Stanford economist, draws a parallel between the Internet and the
way electric power came to be used in factories. Prior to electricity, factories were organized
around big shafts being driven by steam or water power. Machines ran from belts attached to the
shafts, so they had to be arranged in more or less a straight line.
At first, with the advent of electricity, big motors were used to drive the same shafts. Only after 50
years were these motors miniaturized, and production reorganized in a way that maximized the
benefits of electricity.
''We're at the stage with the Internet now where we see some of the potential, but haven't yet
figured out how to exploit it effectively,'' Varian said.
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