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Working Without Walls

'Virtual' companies benefit from flexible, lean business model.

July 08, 2001|RONALD D. WHITE | TIMES STAFF WRITER

Businesses that can react quickly to an economic downturn have the best chance to survive hard times, but perhaps none are as nimble as a "virtual" company that has no central office, minimal overhead and can even go into hibernation if circumstances demand it.

Agility is just one reason the virtual company has established a foothold in the workplace that isn't likely to be lost even during an economic slowdown. For certain small companies, such as Portland, Ore.-based Web design firm Sparkplug, going virtual represents the ultimate "run lean" model, allowing them to undercut competitors' bids while still maintaining a high profit margin. And some employees who have opted to join a business without walls like it so much they can't imagine working in a regular office again.

"Every day from my old office, I would call the woman taking care of my newborn daughter and cry," said Lisa Davey, now a Sparkplug project manager who works from her Laguna Niguel home. "The day I decided to quit, a friend called and said, 'I have this idea. Work with me, and we can build a business. You can work at home and do as much or as little as you want.' "

FOR THE RECORD
Los Angeles Times Wednesday July 11, 2001 Home Edition Part A Part A Page 2 A2 Desk 1 inches; 18 words Type of Material: Correction
Steller Secondary School--The name of Steller Secondary School in Anchorage was incorrect in Sunday's Work Place section.

Traditional businesses are borrowing from the model, shedding costly office space and reducing staffs, although with admittedly mixed results, experts say. In a true virtual company, contact between co-workers is maintained via the Internet on high-speed connections and through e-mails and telephone calls. Co-workers might meet with one another at the beginning of each new project with a client or as seldom as once a year at a company retreat.

"One or more aspects of virtuality are being built into parts of most businesses," said Al Vicere, professor of strategic management at Penn State University's Smeal College of Business. "This is the wave of the future."

David Lewin, the Neal Jacoby professor of management, human resources and organizational behavior at UCLA's Anderson business school, agreed to an extent.

"You can clearly make the argument that there will be a growth in virtual companies. It won't replace the traditional ways of doing business, but it certainly will supplant some of it," Lewin said.

Some of the reasons are illustrated by stories of virtual businesses.

* Tabula rasa, clear the slate:

When Matthew Triplett's parents were finally fed up with the public schools in hometown Anchorage in the 1970s, they banded together with other parents and opened the Stellar Alternative School for grades seven through 12. Years later, Triplett, now 32, would become exasperated with traditional business and office environments and take a similarly radical step.

Long commutes and staggering local real estate prices were bad enough, but the meager rewards at work were intolerable, said Triplett, who was a technology director for a Bay Area Web site design company at the time. "We worked in this extravagant office building, and the top people in the company were raking in the money and driving BMWs."

Toiling away at the office late one night, it hit him: " 'What am I doing here? Why keep doing it?' It became crystal clear that I could start my own company," Triplett said.

Triplett founded Sparkplug in 1997. Within nine months, his best friend from the Stellar School, Dave Bowers, had joined him as a roommate and co-worker. They left the Bay Area for the much lower cost of living in Olympia, Wash. They added colleagues as the business grew. Sparkplug now includes seven main employees, spread from Vancouver, Wash., to Laguna Niguel, plus seven others who are called on as needed.

Like most virtual businesses, there is a central telephone link that forwards calls to the employees, and there is a mailing address and, of course, a Web site, (http://www.sparkplug.com).

Last year, the company grossed $1 million in fees, leaving the main employees with incomes as high as six figures. Sparkplug hasn't had a new contract since February, but Triplett says that his company has a special ability to survive.

"We've got some work from existing contracts, and people are allowed to do other things," Triplett said. "In the meantime, we're not paying rent on an office or on equipment. We have no salaries to meet."

* Virtual and proud of it:

Everything about the Cabot Advisory Group, from its slick brochures to its Web site (http://www.cabot grp.com) communicates self-assurance. Unlike Sparkplug, which neither hides nor emphasizes its virtual nature, the Cabot Group brochure announces its structure up front.

That is perhaps easier when every principal employee at one time commanded six- or seven-figure incomes with such major corporations as GTE (now Verizon), Texas Instruments Inc., Wells Fargo Corp., Gannett Co., Xerox Corp. and Hewlett-Packard Co.

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