Richard Sheridan doesn’t have a corner office. Or an office. Or even his own desk. The CEO of Menlo Innovations sits wherever his staff wants him to sit--near the sales pipeline board or next to the project manager with whom he’s working on a blog or with a team of programmers. And Sheridan’s not the only one in constant motion. At Menlo, a custom-software business in Ann Arbor, Michigan, the 50 employees work on projects with partners that change every week. The company’s "factory floor manager" maintains the protean seating chart, constantly mixing and matching colleagues and projects. 

"We borrowed the idea of switching from the airline industry," says Sheridan, who co-founded the company after being downsized from an executive position at another technology firm. (His photo graced the cover of the May 2003 issue of Forbes alongside the headline: "Got Fired? Hire Yourself!") "The National Transportation Safety Bureau realized many years ago that if a pilot and copilot work together a lot it breeds a complacency that produces danger," Sheridan explains. "Their minds no longer inject the questioning, the curiosity, the 'Hey, why are you doing it like this?' Switching gives us that freshness." 

The practice also builds in perpetual learning as employees effectively mentor each other all the time. Everyone at Menlo works in pairs, with two people sharing one computer. Sometimes a veteran and an intern work together: The veteran shares his experience and the intern explains what she’s learned from a recent college course. Sometimes two veterans pair up, seeing how far and fast they can push the job. "We’re always transferring knowledge to the new person--and if you have one more day’s experience on the the project than I do, you are the expert," says Ted Layher, a programmer at Menlo for eight years. "We get a lot out of talking through problems out loud. Have you ever asked someone a question and then discovered the answer just because you spoke the words? That’s what happens." 

The variety of partners and tasks also keeps employees from burning out on projects that sometimes roll out over years. Another weapon against burnout: 40-hour weeks. To ensure employees never work evenings or weekends, the company offers clients 25 percent discounts in return for the right to flex deadlines. It also keeps a few bench players busy on in-house projects. When client activity gets heavy, they step in to lighten the load. 

Hiring well is essential when everyone in a particular job will work cheek by jowl with everyone else in that particular job over and over throughout the year. To ensure culutral fit, Sheridan and his team invented a practice they call "extreme interviewing," in which job applicants are brought in en masse, paired with other applicants and asked to work on representative Menlo assignments while Menlo’s existing staff observes. After the candidates go home, the staff gathers to discuss how well each one collaborated and whether they would be willing to pair with him or her on a real project. Candidates who win over the majority return for a paid one-day trial. That’s followed by a three-week contract before the deal is sealed. 

Menlo’s feedback system further reinforces the collaborative model. Employees won’t be promoted without first having lunch with a panel of their peers, during which they absorb detailed critiques of their performance. They can request as many lunches as they like and choose their own reviewers. Selecting folks who are most likely to be critical is considered a smart move. 

The company’s practices are so admired that 5 percent of its $3.6 million in revenues derive from teaching them to others. Sheridan and his colleagues conducted more than 240 tours last year, exhibiting Menlo’s culture to executives from companies like Mercedes Benz, Thomson Reuters, and Toyota. "People come here to learn about us because they want to reinvent their own cultures," says Sheridan. "And they end up wanting to give us their children. They say, 'My kid would love to work here. Can I send you his résumé?'"