### IBM's New Headquarters Reflects A Change in Corporate Style

New York Times

September 17, 1997

#### By LAURENCE ZUCKERMAN

Thursday is official moving day for one of the nation's most storied blue-chip companies. And though the old house and the new one are less than a mile apart, the vast differences between them speak to the radically altered look of today's Corporate America.

In 1964, when IBM moved into its sprawling corporate headquarters sitting majestically atop a hill in Armonk, N.Y., the company not only dominated the computer industry but stood as the model U.S corporation of its day -- faceless, gray and even dehumanizing as the building and company may in retrospect seem.

Thursday, when International Business Machines Corp. cuts the ribbon on a new, much smaller corporate home quietly nestled in a woodsy ravine nearby, the building will signify the post-modern, post-downsizing, employee-empowerment era that the company now represents.

For no longer does the business world operate as it did in that earlier Organization Man era, when corporate headquarters stood as symbols of strength and power, the grand fortress from which the king, insulated by layers of management minions, issued decrees to all corners of the empire.

These days, the headquarters of the largest companies are increasingly the place where fewer people handle a few, crucial tasks -- like long-term strategy and finance -- with the day-to-day decision making left to division managers in other locations.

And in IBM's new quarters, no detail may better embody the differences between the business world's architectural and management thinking in the 1960s and the '90s than the placement of the office of the company's chairman, Louis Gerstner.

In the old 420,000-square-foot, 900-person headquarters that Gerstner inherited when he joined the ailing company in 1993, he worked in a cloistered space at the end of a long, forbidding corridor of private offices.

Now, in the new headquarters that he helped design, Gerstner and other top executives occupy the center wing of the Z-shaped structure, with most of the 600 other people working at cubicles in expansive spaces obstructed by few walls or doors. The 280,000-foot building even tapers off at the ends so that the maximum amount of floor space is near the center -- where Gerstner's office is.

"The idea is to have as many people as close to him as possible," said William Pedersen, a partner at Kohn Pedersen Fox Associates, which designed the building.

The open floor plan and use of the latest technology emphasize collaborative work by employees, who can tote their portable PCs anywhere in the building and still be connected wirelessly to the Internet.

Many outside design experts praised the corporate approach embodied by IBM's new quarters.

"The function of a corporate headquarters has always been as much about the identity of the corporation as it has been about supporting the workers in that building," said Rick Robinson, a principal at E-Lab, a Chicago design and product-consulting firm.

"Now," he said, "people are using headquarters to express not reliability or solidity but to say, 'We're creative. We're innovative. We value our people.' It sounds obvious, but until recently companies weren't talking about that."

Though the old and new headquarters buildings are both situated on the same 432-acre parcel that IBM bought in the mid-'50s, they couldn't be more different. The old, designed by the architects Skidmore, Owings & Merrill, was a classic example of the corporate architecture of the Cold War era -- betraying no sign that it was home to a computer company and dominated by scores of private offices as well suited, say, to an insurance company as to the highest of the original high-technology companies.

Not satisfied that the building was suitably grand, though, IBM added a glass gazeboesque entrance hall in 1984. Yet, despite being designed by the reknowned I.M. Pei, the addition struck many as an ill-fitting add-on -- perhaps unconsciously reflecting the clumsy giant that IBM had become.

As IBM stumbled in the 1980s and early 1990s, laying off tens of thousands of employees and racking up billions in losses, its headquarters, too, seemed to reflect the decline.

The building lacked the wiring needed for high-speed networks of personal computers. It was also aging fast, with escalators and elevators regularly breaking down. One Friday evening two years ago, one of its electrical fixtures caught fire, covering much of the interior with a thick black soot.

The new headquarters is the vision of the imperious Gerstner, who was brought in to turn around the company in 1993. At the time, IBM had already eliminated more than 100,000 jobs and lost more than $7 billion. (It would lose nearly $8 billion more in that year.) But under Gerstner, IBM has returned record profits and seen its stock price more than quadruple to $99.625 a share, up $3.375 Tuesday, after a two-for-one split earlier this year.

Under its legendary chairman, Thomas J. Watson Jr., who held sway from the 1950s through 1971, IBM began a tradition of hiring such world-renowned architects as Edward Larrabee Barnes, Ludwig Mies van der Rohe, and Eero Saarinen to design various buildings around the world. The collection included the granite skyscraper with its celebrated public atrium at 590 Madison Ave. and 57th Street in Manhattan.

But Gerstner, who sold off the Manhattan temple and billions of dollars worth of other IBM-owned real estate since his arrival, wasn't interested in winning design awards.

"This is a building for IBM and its customers," he said during an interview in the conference room adjoining his new office, which overlooks the dense forest that creeps right up to the edge of the building. "It's not a building for architects."

Instead, the House That Lou Built reflects the new role that a headquarters building plays in today's business world. Rather than being a monument, it tries to be a living example of the company's values. At the same time, numerous displays of vintage tabulating machines and computers stand as reminders of IBM's technological heritage.

The two-story entrance lobby, which has black granite floors and walls with stainless steel panels and a ceiling of copper leaf, is handsome but deliberately not flashy. Its most distinguishing feature is a glass and steel prow that brings in natural light and soars up to the top floor, where it is also a major feature in the new board room.

To be sure, the top jobs still have their perks. Gerstner and his chief lieutenants have large private offices on the top floor of the three-story building, each with a private conference room attached. ( Gerstner's suite even has a private shower.)

The bulk of the rest of the staff (with the exception of the company's lawyers) occupy open cubicles.

"I like to walk the floors," Gerstner said. "There is a sharing that happens in an open environment. Those are values that I felt were important to IBM."

He explained that senior executives needed privacy because they spend much of their day seeing customers and often do sensitive tasks like management reviews. But he wanted the rest of the staff to work in the open to increase teamwork and communication.

To sell the staff on the new layout, the company took care to make the work spaces as attractive as possible. The desks and file cabinets are made of a handsome blond mahogany. Space-aged black chairs made of recycled plastic that can be adjusted to any ergonomic fancy grace each cubicle. The ceilings and walls are padded to dampen noise.

"We had to give people a sense of quality about the space so they didn't feel demoted," said Richard A. Carlson, the chief interior designer, who is a principal at Swanke Hayden Connell & Partners in New York.

To compensate for the lack of private space, there are several spots designed for informal meetings, as well as 38 conference rooms distributed around the building. Other amenities include a swanky new split-level cafeteria, outdoor terrace, a fitness room and a jogging path through the woods.

But what captivates the first-time visitor immediately is the living museum of calculating devices on display throughout the building. Carlson combed through IBM warehouses in Kingston, N.Y., and Paris, emerging with hundreds of items, from a Mesopotamian counting stone from 4,000 B.C. to IBM's famous Selectric typewriter, circa 1961.

The exhibits also include a gilded black laminate French calculator from 1855 that resembles a fancy upright piano and IBM's Selective Sequence Electronic Calculator of 1948 -- a gunmetal gray desk topped by a three-foot high control panel made up of scores of toggle switches and tiny lights -- that might have starred in a 1950s science fiction film.

The displays are a deliberate reminder of IBM's historic role in the computer industry. But the company also wanted the building to showcase its future. To stay within the building's $75 million budget, Gerstner turned down requests for an underground parking lot and even brought in some furniture from the old headquarters. But he did not scrimp on the building's technology.

A high-capacity network connects every work station to IBM's corporate network and the Internet at speeds many times faster than the average corporate connection. The conference rooms bulge with multimedia equipment, including two giant television monitors, laser disc, videocassette and audiocassette players and, of course, a personal computer. All can be controlled by a touch screen on the conference table.

An electronic whiteboard, which uses special pens with laser reflectors, allows presentations to be shared remotely, printed out, or stored in a collaborative data base.

"I wanted this building to be a living example of the strategy of the company, which is built around network computing," Gerstner said.

As for the old headquarters, IBM has had it for sale since 1995, but so far no one has made an offer. Gerstner said that IBM was now "back at square zero" in planning what to do with its relic on the hill. "We probably would have taken any reasonable bid," he said.

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