A Prescription for Profit

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Parsippany, N.J.—What happens when marketers and salespeople share desk space with clinical researchers and scientists at one of the world’s largest pharmaceutical companies? Profitable things—that’s been the case, at least, for GlaxoSmithKline (GSK), where executives credit the design of a new seating plan, and the business ethos it embodies, with generating $50 million in revenue growth—from just one product line.

The key was executing a design at its product-development locations that enables a diverse cross section of employees to converse with each other face-to-face around a single table—a deceptively simple, almost quaint notion, admits Robert Wolf, GSK’s vice president for human resources, but one that proved the perfect cure for overloaded schedules that can make essential face-to-face interactions incredibly difficult to arrange.

The new workspace design is “all about speed and generating ideas,” Wolf explains. “If you’re a packaging designer and you’re sitting across from a clinician, you don’t need to schedule a meeting to share ideas—which could take a month. You just lean over and start talking. And these informal interactions spark creative energy.”

Like other multinational concerns, GSK grew through mergers and acquisitions during the early years of this decade. But annual revenue growth in its consumer products division—which includes Aquafresh toothpaste, Nicorette gum, and Zantac antacid—remained an anemic 1 to 2 percent, Wolf says. So in 2004 GSK engaged consultants from London-based DEGW to design a cultural and spatial reorganization that would speed the flow of new marketing campaigns and product development.

Dubbed “Project Ignite,” the effort produced eight brand-focused innovation hubs divided between two existing buildings, one in suburban Parsippany, N.J., the other in Weybridge, U.K. Business results have been impressive: Despite the recession, annual revenues from GSK’s consumer products are growing at 9 percent—and the number of new products in development has doubled.

Hub of the Action

The first innovation hub opened in 2007 at GSK’s Parsippany facility, an unassuming office and lab complex originally built in 1957 and since expanded three times to a total of 200,000 square feet. Working with Philadelphia-based Jacobs/Wyper Architects, DEGW transformed 8,000 square feet of conventional offices by removing cubicles and knocking down walls to create a single open space for two dozen employees from GSK’s Dental Care unit.

Within an innovation hub there are no individual desks or assigned seating. Instead, staff members—equipped with laptops and cordless phones—may choose to sit in one of three zones: at a large “kitchen table” in the center of the room; at a series of connected desks, dubbed the “buzz zone,” surrounding the table; or in an enclosed quiet room to one side. (Lockers provide storage for files and personal items.) The overall feel is one of openness and uninterrupted sight lines between employees, even to the glass-enclosed quiet rooms.

But this is not open-plan seating for the sake of open-plan seating. GSK drew together personnel from different functional units that were previously located in different parts of the building—including marketers, packaging designers, and clinical scientists—and set them to work on innovating a family of related brands. Vice presidents rub shoulders with junior team members, and the lack of hierarchy and physical barriers encourages what Wolf calls “fusion” or “collisions” between people and ideas. It’s instant messaging, minus the technology.

As there’s nothing remarkable or extravagant about furnishings and architectural design, each hub’s aesthetic derives mainly from the brands. Photos of salad, for instance, cover walls in the Alli weight-loss area; an oversized nose, actually a wearable costume, dominates the entry to the Breathe Right nasal strips unit. “Before, GSK’s space was very vanilla, and there was no way of knowing what people were working on,” observes Nicola Gillen, DEGW’s director of strategy. “Bringing all of their rich branding to life was key.”

50 Million Benefits

The cost of constructing the hubs is comparable to renovating office space in a more traditional manner. Constructing the original Dental Care 8,000-square-foot hub at Parsippany cost $1.4 million, which equates to $175 a square foot. The price tag for seven subsequent hubs, completed by 2008, was often significantly less, with 5,000- to 6,000-square-foot facilities coming in at as little as $700,000.

One reason why is that, based on user feedback, DEGW was able to deliver hubs where the allocated square footage had shrunk. Workers said they needed less private space, for instance, so newer quiet rooms seat just four people as opposed to 12, reducing the hub’s footprint. And the amount of individual space per employee is less in a hub than the standard GSK workspace (although there is more shared space).

The hubs are also extremely flexible workspaces. The first hub opened with 23 people—and now comfortably houses between 30 and 40 in the same space, with no design alterations.

But the square-footage savings is almost beside the point—the real value of the design comes in its transformative effect on employees and their productivity. Wolf, in fact, is convinced that the design of the hub environments has directly contributed to eight-figure revenue growth.

Need an example?

Marketers collaborating face-to-face with clinicians at GSK’s Smoking Cessation hub in Parsippany, for instance, launched an advertising campaign called “The Beauty of Quitting” in 2007. It touted research suggesting that non-smokers have fewer facial wrinkles than smokers and promoted the idea that using a smoking cessation aid would lead to better skin. Revenue from GSK’s Nicorette and Nicoderm brands subsequently grew by $50 million.

Another key benefit, crucial in the fast-moving world of consumer products, is the speed at which decisions get made. When asked in a survey how long it takes to gain approval for a clinical protocol, just 27 percent of respondents said less than a month was required in the pre-hub days. After moving to the hub, that figure increased to 42 percent.

“We didn’t do this because it looks cool or we wanted to save money on real estate,” Wolf says. “This was about increasing profit through a business strategy.”

Indeed, the first eight hubs have produced such notable payoffs that GSK executives are extending the concept to facilities worldwide, including ones in China and India. In Parsippany—where 85 percent of non-hub employees say they want to be located in one—they’re even experimenting with building hub-like space for business units unrelated to brands, such as finance and accounting.

“We joke about the hubs and the ‘hub-nots,’” Wolf laughs. “Most people in a hub say they wouldn’t want to go back to a regular office—it just works.”