Intel's New Office

The chipmaker picks three U.S. offices for a redesign program aimed at improving productivity, boosting morale, and cutting costs

Intel (INTC) employees have long complained about their drab office surroundings, but it took Conan O'Brien to spur change. This spring the comedian had a good laugh on his late-night TV show when he broadcast footage of his tour through the depressing 1970s-era gray cubicles at Intel's Silicon Valley headquarters—complete with support columns numbered just like a parking garage (C14, F8, H10, etc.).

Touching a gray wall, with gray trim that flows into a blue-gray carpet, O'Brien deadpanned, "I love what you guys have done with the color here. I think the gray looks very nice with the gray and works very well with the grayish blue." Then, proceeding to navigate through a sea of gray cubicles, O'Brien muttered, "This is good.… There's no individuality. There's no hope."

The segment garnered more than 50,000 viewings on YouTube. And it likely sped up work on Intel's office redesign, a project the company had been mulling for months but had yet to green-light. Alas, an office design that was hip and forward-thinking years ago—Intel was the first company to put all its employees, including the chief executive, into cubicles—had become woefully out of date.

"Intel led the cubicle revolution in the 70's. It helped feed our innovation at the time," says Intel Chief Executive Paul Otellini. "Today, collaboration is deeper, wider and less constrained by physical limits. I believe it is time to bring our physical environment in synch with our needs for real time person-to-person collaboration."

Lounge Act

To update its offices, the chip giant plans to spend $10 million on a three-month pilot program to redo work spaces in three facilities—one each in California, Oregon, and Arizona. Its goal: to improve productivity, boost employee morale, and cut costs.

As part of the project, between 25% and 50% of Intel's 1,150 lawyers, marketers, and engineers working in these buildings will give up their assigned cubes. Instead, they will store their personal belongings in lockers and grab desks, whiteboards, and overstuffed armchairs in more colorful, Starbucks-like common areas on a first-come-first-gets-the-space basis.

To make private calls, these laptop-brandishing office wanderers will use glass phone booths, with space for up to four people, or jockey for conference rooms—not available for advance booking. Each floor will also feature a break room with a kitchen area and free coffee and soda. Nearby, employees will sit in a bar-like setting around a large plasma TV hanging off a curved, colorful wall. Of course, there will be plenty of outlets and Web connections available for anyone who wants to bring their laptops along. "It will be like walking into an airport lounge," says Neil Tunmore, an Intel human resources director in charge of the redesign.

Hip to Be Sparse

Intel is trying to play catch-up to its hipper Silicon Valley neighbors including Google (GOOG), whose Googleplex features high ceilings, glass partitions, and fun colors (not to mention a piano in the lobby). Google's offices have long presented a lure for job applicants that Intel's lacked. Naturally, the younger Google was able to create its work spaces from scratch. Intel, however, is at the forefront of established American corporations—the old guard that's been around for decades and is now trying to bring its office spaces up to modern times.

The key is in not changing too much, too quickly. Some Intel employees will stay in assigned cubes, but those will lack windows and will be surrounded by 52-inch-tall cream-colored partitions, more than a foot lower than the current, gray ones. The dimensions of the cubes will also shrink by a third, into an 8-ft. by 6-ft. space, and become sparser: A typical office will feature a small modern desk of light maple with metal accents, a chair, and a two-drawer file cabinet on wheels that will be topped off with a pad, to double as a guest chair.

The new cubicles won't even have trash cans. Instead, workers will use tabletop trash trays, from which they will carry their coffee cups and candy wrappers to a central trash bin located in a common area. The idea, already tested with 5,000 Intel employees in Ireland, is to encourage recycling, starve mice and other pests, and to simplify and speed up trash collection.

Splash of Employee Optimism

The cream office partitions with glass inserts and light-colored furniture should result in an airier feel. Contributing to that will be new, brighter lightbulbs. Grayish ceiling tiles will be replaced with white-colored ones. Most gray walls will be repainted white, while some will enliven the environment with accent colors such as yellow, green, purple, light orange—and, occasionally, Intel's trademark bright blue. "We are trying to provide an environment that feels more comfortable and energized," says John Scouffas, design principal at designer Gensler, which created the new look for Intel. Gensler also has designed offices for Cisco Systems (CSCO) and Hewlett-Packard (HPQ).

In communal areas, certain glass partitions—white or blue—will feature Intel logos. Other dividers will be of mesh glass and wiring, resembling wafers—just like the silicon plates from which Intel cuts its chips. "Right now, once you enter the building, it's a gray world," Scouffas says. "[After the redesign], it will be obvious that you are in an Intel space."

The blue-gray carpets will be ripped out and replaced with carpeting that's crème, yellow, and beige. CEO Otellini, who himself inhabits a standard cubicle, signed off on the color scheme. "The reason Paul liked this color palette is, it's not in your face, and it can last 15 years," Tunmore says. Teams in various locations will be able to choose from a select set of colors and fabrics.

The facilities in Oregon and California will undergo a complete face-lift, getting new furniture, carpeting, and paint. But in Arizona, Intel won't go to that extreme. Instead, the company will experiment by simply changing the layout of the furniture throughout the facility. The idea is to better understand which new design elements make the biggest difference for employees.

Cost-Cutting Designs

The hope is that the new design will increase productivity, raise worker satisfaction, and reduce costs. A recent Intel survey found that 60% of the company's cubes are empty at any given time. Most employees work from their office an average of three days a week, with the remainder spent in off-site meetings or working from home. By using shared space, Intel hopes to house 20% more employees in the same space, Tunmore figures.

Other costs could drop as well: Cisco, which piloted flexible work spaces with a group of 140 workers several years ago, found that its office furniture expenses dropped by 50%, while real estate and workplace-service costs each fell by 37%. Staff satisfaction increased as well. "Our goal is to make people excited not just about the work, but about coming to work," says Chris Kite, a Cisco vice-president. Cisco plans to expand its pilot into other offices in the company.

With more workers increasingly mobile, many corporations have begun to revamp their offices in the past two years, says Kevin Schaeffer, a principal and managing director at Gensler. "This seems to be a fairly hot issue in the corporate world."

Competitive Surroundings

Will the new design work for Intel? Even within the company, the effort remains highly controversial. Tunmore's recent posting about the project on an internal blog quickly became the most discussed entry, with more than 150 comments in the first morning. To designers' chagrin, employees immediately began to concoct strategies for hijacking phone booths and unassigned conference rooms for their personal offices. One bright idea: to make it the responsibility of an assistant to grab the nicer office spaces early in the morning, before the bosses come in. Others worried the setup will increase noise levels and lead to more frequent interruptions.

Yet, the status quo doesn't work, either. An internal survey of 4,500 staffers done in May showed that only 12% of Intel employees are content to leave their work surroundings as is. (Intel's human resources department began to consider a redesign after receiving many employee complaints and watching applicants opt for jobs with other companies that have more comfortable offices.) About 55% of the staffers surveyed liked the idea of an open working environment and lower partitions. Another 33% liked color changes but not lower partitions.

The three-month-long pilot will be evaluated throughout 2008. If the response is positive, Intel may eventually decide to splurge on a revamp of all its offices, a project that could cost about $300 million in the U.S. alone, where Intel has 6.5 million square feet of office space.

Of course, Conan O'Brien is sure to find something to tease Intel about even then.

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