(FORTUNE Magazine) - There may be no "I" in "team," but there is one smack in the middle of the word "office." The most heated discussions over office design center around individual, not communal, workspace. But that's starting to change.

When A.G. Lafley took over as CEO of Procter & Gamble (Research) in 2000, he wanted to create an environment that encouraged teamwork and collaboration. So in 2002 he gutted the stodgy executive floor, opened it up, and added a "living room" for casual gatherings. Throughout the building the company added "huddle rooms" with laptop connections and phones. There are espresso areas with cushy sofas, CNN on flat screens, and in one a faux fireplace. The Cincinnati headquarters still looks professional, but also open and egalitarian. "Knowing that people are different, we provide different settings," says Serge Bruylants, P&G's global architect. "We shouldn't put too many boundaries in place."

That kind of thinking is making inroads across corporate America. Right now, according to office furniture maker Knoll, offices are 80% individual and 20% collaborative space, but communal space is closing the gap. The reason: Group time is more important, and therefore so is group space, says Christine Barber, Knoll's (Research) director of workplace research. Gathering around a table in a windowless conference room is not the answer. "Employees need more spaces for impromptu meetings," says Herman Miller's (Research) Betty Hase, a workplace strategist, for those off-the-cuff chats where ideas start to froth. So designers are creating offices to replicate dense, urban environments, with areas built to look like piazzas, "intersections" where groups can form spontaneously, and homier spots like coffee bars. "It is much more conducive to conversation," says Jennifer Becker, who works for P&G's global snack division, about the seventh-floor coffee lounge.

The effect of design on productivity is impossible to measure precisely. But there is little doubt that it can make a difference. Consider: In 1968 participants at the Vietnam peace negotiations took ten weeks to agree on the shape of the conference table.