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Just days after his arrival as the new president of AstraZeneca (AZ) in Japan in April 2013, Gabriel Baertschi could feel that something was wrong. The location of the office was fine, in the landmark Umeda Sky Building, within a 15-minute walk of Osaka’s Umeda station, the busiest hub in an economic region four times bigger than Hong Kong or Singapore, and just an hour from Kansai International Airport. But the building itself would not do. Employees of the Anglo-Swedish chemist were spread over nine floors of a 20-year-old tower, with no interior stairs, a lot of walls and cabinets dividing people, and little modern technology.
“We have a new vision for Japan, which is to grow very quickly and to bring our products to patients faster,” says Baertschi, noting that AZ’s Japanese sales grew much faster than the market last year, pushing the company up three places to number nine. The old office represented “the worst scenario . . . for different departments working together, R&D working with commercial, or working with sales, marketing, regulatory or government affairs”.
AZ had been discussing a move with its property agent, JLL, since November 2011, after the big earthquake earlier that year had got everyone thinking about structural resilience and disaster planning. Meanwhile, the London-headquartered group was keen to convert all its operations around the world to its “iWork” principle, under which staff are encouraged to work collaboratively in open spaces. But under Baertschi, the project gained a “significant jump start”, says Neil Hitchen, regional director and head of Japan markets at JLL.
Within six months, a new location was finalised – three floors in Tower B of Grand Front Osaka, a gleaming new development owned by Mitsubishi Estate, Japan’s biggest landlord, and even closer to Umeda station. Within another six months the move was complete – just in time for the beginning of the new fiscal year in April.
Normally, an office fit-out of that scale would take about a year, says Daisuke Tanaka of the Design Studio, a Tokyo-based consultancy that led the project. “We could not tell AZ that we couldn’t do it in half the time. The team of contractors – more than 100 of them – were all really co-operative; that is why we could finish it so fast.”
Here the principals involved in the move – and some of the staff affected – offer their thoughts on the transition.
Gabriel Baertschi, president, AstraZeneca Japan: The reasons why the old place was wrong are much the same reasons this one was right. Before, cross-functional working within AZ was not optimal. Every department was separated by a floor, which you could only get to in an elevator. There were a lot of walls, there was clustering of colleagues, you could not see people working. If you wanted to interact then you had to call for a meeting, and do it through Outlook. There were almost never informal discussions happening, and the management was isolated from the rest of the group on its own special floor. I was left completely alone in the corner, protected – it seemed – by two bodyguards. I could feel that this building was never going to help us deliver our vision of bringing drugs quickly to patients.
Katsuyoshi Sugita, head of human resources, AZ Japan: The shape of the old building is very strange. It was completed in 1992, just after the bubble economy period, so I think the designers were not thinking about efficiency or effectiveness. They just wanted to have something very different from others. It didn’t work well!
Gabriel Baertschi: I think we saw about 10 potential properties in all. Our main question was whether we could make the kind of office we wanted. Could we put a staircase in there, for example, to provide a place of exchange where people meet and connect? Some of the landlords did not accept that, so we were able to eliminate them. Another fixed consideration was proximity to public transport – we needed to be close to the train station. And of course, it had to be a price we could afford.
Nariki Yamaguchi, head of markets, Osaka, Jones Lang LaSalle: The price was good, considering the location and the building grade. We think this is the bottom of the market after many years of falls in grade-A rents, which are now averaging Y15,492 ($142) per tsubo (roughly equivalent to 36 sq ft) per month, including service changes. From now until 2017, the supply of large-scale buildings will be a little limited. We can see that the incentives that landlords are offering tenants – such as six months of free rent – are already beginning to fall.
Neil Hitchen, regional director and head of Japan markets, JLL: We heard, second-hand, that there was quite a lot of anxiety at AstraZeneca around the old building, and how it would stand up to a big earthquake. It was quite a jolt they felt [in March 2011]. Even if there was no physical damage, there’s a reluctance to occupy a building moving around metres in the sky, 30 floors up. Now they are around the 19th floor of a brand new building, where the level of seismic resistance jumps quite considerably.
A spokesman for Mitsubishi Estate, landlord of Grand Front Osaka: Some of our tenants moved to our building to secure a high level of safety in the event of an earthquake. Earthquake resistant braces are fixed inside the core frame which firmly supports the building, along with buckling-restrained braces and oil dampers. But there are other tenants who decided by looking at everything: from the high-profile and iconic nature of the building, to the high-quality specifications. We think AstraZeneca falls into that category.
John Cook, project director, JLL: One of the factors we needed to look at was providing back-up power generation, given the frequency of earthquakes and potential shutdowns. In Japan we find it’s more common for financial services to want 24/7 continuity of operations, but this was obviously an important consideration for AZ. They ended up installing back-up facilities on the seventh floor, on a roof area.
Gabriel Baertschi: Another reason for moving was that the building was a little old, from an infrastructure point of view. We didn’t have all the technology we needed to connect with the rest of the world – such as AZtrium, which is our new video conferencing system, where you feel like you are talking to people in real life. Now, we can have our R&D group directly interacting with universities in Tokyo, in Nagoya, in Yokohama. The other office was not set up for that; we had a remote facility but could not put enough people in it.
Mohit Manrao, director, marketing excellence department, AZ Japan: To me, the biggest effect of the move is very clear: if you open people’s calendars, three months ago they were all booked, and all meeting rooms booked. Now most people are meeting informally, just approaching each other and taking decisions. If you have your key stakeholders on one floor, you can just hop from one place to another. Depending on what the day looks like, I can pick up my laptop, my iPad and my PHS [Personal Handyphone System, a lightweight mobile on a closed wireless loop] and go to work with other teams.
Midori Watanabe, secretary, oncology and anaesthesia, AZ Japan: As a PA, I used to spend a lot of time trying to find available meeting rooms for my teams. Now people just use the workspaces, or the tables in the café adjacent to the reception area. Everyone has much more freedom to meet with other people in casual exchanges.
Gabriel Baertschi: It is important for me to enter this office and see my employees. It is the same with every manager here, all the offices are made of glass and very simple; we didn’t want to create differentiation between managers and employees. The old office didn’t have any place where leaders could engage in a town-hall type setting. Here we have the café, which is a very informal way of connecting with up to 150 people for an update, a Q&A, whatever.
Akiko Nakao, director of projects, R&D department, AZ Japan: This new building has kind of forced us to get rid of old documents. Some we used to store without looking at them very much. Now I have almost no documents on my desk, which makes me much more efficient in accessing key information.
Katsuyoshi Sugita, head of human resources, AZ Japan: On the first day I was so shocked that people seemed very different from the past. People used to be quiet, silent; now they’re working collaboratively, and talking a lot. I also think overtime work is reducing. Many people are leaving the office around 6pm or 6.30pm.
Ichiro Kosen, brand manager, marketing, AZ Japan: I feel like my email volume has dropped by 10 to 20 per cent, because the departments are now much closer to each other. And sometimes in email I do not understand what the context is, or the urgency. Direct communication is so much better.
Gabriel Baertschi: At the end of the day we are paying about the same in rent as we were before – but with a brand new office, which feels more airy. Yes, there were one-off costs in creating a new space, and restocking it with new furniture and new technology, but I really believe that this cost will be traded off very quickly by the benefits. I think that the transformation we’re undergoing here is not just the transformation of an office, but a transformation of the way we want this company to operate.