MAKING VIRTUAL OFFICE REALITY COAST-TO-COAST CHIAT/DAY JAY CHIAT

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Chiat/Day went "virtual" this year, using technology to let staffers complete work without assigned workspaces.

Agency Chairman Jay Chiat came up with concept in mid-1993 and decided to roll the dice, investing in hardware and software designed to assist agency employees in "doing great work" but putting the reputation of his $920 million creative powerhouse at risk.

After only about seven months of planning, Chiat/Day converted. First the Venice, Calif., headquarters underwent a top-to-bottom retrofit, completed in January. The New York office staff followed in July, moving to a new space built to virtual-agency specifications.

The move to virtual is Mr. Chiat's attempt to modernize an office design he believes dates to the Industrial Revolution. In an economy based on manufacturing, employee attendance was crucial to productivity. But in today's service-based economy, good work requires good thinking and access to information. Showing up for work doesn't always get the job done.

Mr. Chiat is putting his money where his mouth is. While detractors suggest the move to virtual is simply an effort to save money on real estate by making employees work out of their homes, Chiat/Day isn't swelling its bank account, at least not initially.

Mr. Chiat estimates the costs of converting the Venice and New York offices at about $75 and $85 per square foot, respectively.

It's a big expense, but "the bottom line is the work," he says, adding that he's already seen the creative product "go up a couple of notches."

It may be an old expression that the assets of ad agencies go down the elevator at the end of each day, but at Chiat/Day, the assets are more likely to be operating 24 hours a day.

But the 63-year-old Mr. Chiat has never believed in the agency status quo. He has consistently eschewed the established office structure, embracing the cubicle long before it became a standard. He gave up his own corner office in favor of a more egalitarian work space.

He also gave up typewriters. As Apple Computer's agency at the time, having just introduced the Macintosh computer with a seminal commercial, Chiat/Day over one weekend in 1984 replaced every typewriter in the shop with a Mac.

While Macs are now fixtures in many agencies, it's too soon to tell whether the virtual organization at Chiat/Day will become a new industry standard. But Mr. Chiat is confident it will. "Everything is replicated, or we'd be driving Model Ts," he says.

For him, the virtual office has paid off: "On a personal level, I'm excited to go to the office now. There's a vitality there that I don't think was there before."

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