Two Cheers for the Virtual Office

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What’s happening to the office? Technology has made it possible to redefine where work is done. The traditional notion of an office as the place where someone goes to work seems to be going the way of the buggy whip, the eight-track tape, and the stenographer.

Companies such as Procter & Gamble, IBM, Hewlett-Packard, AT&T, and Compaq have partially or fully eliminated traditional offices for field sales and customer service. Other companies have eliminated offices for workers including researchers, real estate managers, and accountants. For these businesses, work is becoming something you do, not a place where you go.

They are successfully replacing offices with technology; portable computers, cellular phones, and fax machines all enable remote or mobile work.

The “virtual” office appeals to many different corporate stakeholders. Mobile or remote workers value the freedom and autonomy that it provides.1 Senior managers like the reduction in real estate costs. As one Bell Atlantic manager noted, “This is not a perk for employees if you can cut half a billion off the bottom line.” Senior managers also value the opportunities that new technologies make possible for increased interaction between sales-people and customers.

However, some managers, particularly middle managers, are troubled by the virtual office. They may find it difficult to do their jobs because the employees they supervise are out of sight; also they may lose their traditional office perquisites. Some workers resist the virtual office as well; those who have too little space at home to set up an office, or distracting family or home environments, are at a disadvantage. While many companies express enthusiasm about virtual offices, a small but growing backlash to the concept is emerging. After implementing or experimenting with the virtual office, a few firms have abandoned it.

While we believe that the flexibility and the opportunities for increased productivity offered by virtual offices are real benefits, we give them only moderate praise because of the things that are lost. In this article, we discuss how firms can maximize the benefits while minimizing the losses of these alternative work arrangements.

How Are Some Companies Adapting to Virtuality?

In undertaking research on virtual offices, our purpose was to assess what is gained and what is lost in substituting technology for a physical office. We wanted to understand the range of approaches being used in different parts of companies and the implications of each approach.



1. Virtual offices are those in which technology has supplanted physical office space. They are not to be confused with virtual organizations, in which firms outsource many of their operations or build an organization using multiple suppliers for traditionally internal functions. For an overview of the latter concept, see:

H.W. Chesbrough and D.J. Teece, “When Is Virtual Virtuous?” Harvard Business Review, volume 74, January–February 1996, pp. 65–73; and

W.H. Davidow and M.S. Malone, The Virtual Corporation (New York: HarperCollins, 1992).

2. Early work on telecommuting, substituting technology for commuting, was done in 1974, when J.M. Nilles coined the term. For a more recent discussion of the topic, see:

J.M. Nilles, Making Telecommuting Happen: A Guide for Telemanagers and Telecommuters (New York: Van Nostrand Reinhold, 1994).

3. For a fuller discussion of the trade-off between control and use of handheld terminals by field service personnel, see:

J. O’Neil, K. Ostrofsky, and J. Cash, “Otis Elevator: Managing the Service Force” (Boston: Harvard Business School, case 191213, 1991).

4. The idea that a company generally makes accommodation decisions to improve its functioning is described as a misconception in:

J.C. Vischer, “Strategic Work-Space Planning,” Sloan Management Review, volume 37, Fall 1995, p. 35–42.

5. F.D. Becker, K.L. Quinn, A.J. Rappaport, and W.R. Sims, “Implementing Innovative Workplaces” (Ithaca, New York: Cornell University, International Workplace Studies Program, July 1994a), p. 6.

6. Infonetics Research Inc., study cited in InformationWeek, 22 January 1996, p. 33.

7. F.D. Becker, K.L. Quinn, and L.U. Callentine, “The Ecology of the Mobile Worker” (Ithaca, New York: Cornell University, International Workplace Studies Program, July 1994b), p. 39.

8. Information about IBM’s program comes from interviews with IBM managers and a case study. See:

E.W. Martin, “IBM-Indiana” (Bloomington, Indiana: Indiana University, 1994).

9. For a more detailed discussion of the ways in which communication technologies supplement and, in some cases, replace social interactions in organizations, see:

L. Sproull and S. Kiesler, Connections: New Ways of Working in the Networked Organization (Cambridge, Massachusetts: MIT Press, 1992).

10. Conversations with IBM managers.

11. Becker et al. (1994b), p. 40.

12. See R. Walton, Up and Running: Integrating Information Technology and the Organization (Boston: Harvard Business School Press, 1989).

13. Information about VeriFone was obtained primarily through personal interviews with VeriFone managers. A Harvard Business School case study provides a good overview of the firm’s approach to the virtual office. See:

D. Stoddard, R. Nolan, and H. Galal, “VeriFone: The Transaction Automation Company (A)” (Boston: Harvard Business School, case 195088, 1994).

Verifone was recently acquired by Hewlett-Packard.

14. For a particularly insightful book on teams in general, see:

J. Hackman, ed., Groups That Work (and Those That Don’t) (San Francisco: Jossey-Bass Publishers, 1990).

Other references for teams include: W. Dyer, Team Building: Current Issues and New Alternatives (Reading, Massachusetts: Addison Wesley, 1995);

S. Mohrman, S. Cohen, and A. Mohrman, Designing Team-Based Organizations (San Francisco: Jossey-Bass Publishers, 1995); and

R. Wellins, W. Byham, and J. Wilson, Empowered Teams (San Francisco: Jossey-Bass Publishers, 1991).

15. Sproull and Kiesler (1992).

16. Much has been written about groupware and other technology to support teams. Early work is best summarized in:

R. Johansen, Groupware: Computer Support for Business Teams (New York: Free Press, 1998).

A more recent book presents a practical guide to combining teams and current information technology. See:

J. Lipnack and J. Stamps, Virtual Teams: Reaching across Space, Time, and Organizations with Technology (New York: Wiley, 1997).

17. See D. Mankin, S.G. Cohen, and T.K. Bikson, Teams and Technology: Fulfilling the Promise of the New Organization (Boston: Harvard Business School Press, 1996), p. 153.

18. C. Handy, “Trust and the Virtual Organization,” Harvard Business Review, volume 73, May–June 1995, pp. 40–50.

19. C.U. Ciborra and N.T. Svetens, “Groupware for an Emerging Virtual Organization,” in C.U. Ciborra, ed., Groupware and Teamwork: Invisible Aid or Technology Hindrance (New York: Wiley, 1996), pp. 188–209.

20. L. Applegate, J. Cash, and D.Q. Mills, “Information Technology and Tomorrow’s Manager,” Harvard Business Review, volume 66, November–December 1988, pp. 128–136.

21. See T.H. Davenport, S.L. Jarvenpaa, and M.C. Beers, “Managing and Improving Knowledge Work Processes,” Sloan Management Review, volume 38, Summer 1996, pp. 53–65.

22. F. Becker and F. Steele, Workspace by Design (San Francisco: Jossey-Bass Publishers, 1995), pp. 116–135.

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Comment (1)
Amirtha varshini
Hi, Love the article. It gives a clear picture about the virtual office. I too work remotely and use Evoma virtual office solution in Bangalore, India but greatly miss the learning opportunity from the seniors and the co-workers.