July 1, 2006
Cubicle Living, Italian Style
Haworth’s new CEO brings a European sensibility to a traditional Midwestern company with increasingly global aspirations.
Planted firmly in the heartland, Haworth is a quintessentially American contract furniture maker, but lately it seems besotted with Italy. It has acquired an Italian company, Italian designs, and Italian customers. Finally last year it went whole hog and acquired an Italian chief executive, but Franco Bianchi isn’t just a CEO. He’s also a metaphor for the company he now runs—just as his predecessor, 63-year-old Dick Haworth (now chairman), embodied the company as it used to be. Son of the former high school shop teacher who founded the business, Dick is a tinkerer as well—and the holder of 14 patents, including a pivotal one covering pre-wired modular panels that brought in a fortune from competitors.
Bianchi, on the other hand, is a cosmopolitan creature of the new global economy. Predictably, his background is in finance (the language of money knows no borders), he speaks French as well as Italian and English, and he impressed Dick when, as a mergers and acquisitions specialist in Europe, he worked on Haworth’s purchase of Castelli, a leading furniture maker in Italy. Bianchi is a bright, charming guy, but those aren’t the only reasons he got the job. “We are on a journey of becoming a truly global organization,” Haworth says, “and we need a leader that understands that.”
Bianchi’s presence at Haworth’s headquarters—on the outskirts of sleepy Holland, Michigan—speaks volumes not just about the direction of commerce in the twenty-first century but about the direction of the venerable company he now runs, which has opened factories and showrooms all over the world. “Franco is one piece of a sea change at Haworth,” industry consultant Mike Dunlap says. “It’s a significant remaking of a whole company.”
For both Bianchi and his company the change has taken some getting used to. When he arrived in Holland in 2002—taking on a series of executive posts en route to the top—Bianchi found plenty of “cultural and institutional resistance” to change, he says. Haworth was a hierarchical outfit where people cultivated a nonconfrontational style. “Please disagree,” Bianchi says he told people all over the company, urging them to debate more freely. “I’m used to a culture where change comes out of lively discussion.”
Haworth’s culture shock at dealing with its new Italian boss must have been easy for Bianchi to understand given the adjustments required in his own household. Feeling like an alien in the new environment, one son wept bitterly some mornings at the prospect of his American preschool, while Bianchi withered under his wife’s reproachful gaze. And for a Bolognese, the area’s unprepossessing cuisine has required superhuman feats of acclimatization. Even Bianchi’s own kitchen is not inviolable. “My younger boy likes macaroni and cheese,” he reports with mock gravity, “which for me is not a civil food.”
Now Haworth is about to eat its own cooking by spending an estimated $30 million to knock down its headquarters—crammed with traditional American-style cubicles—in favor of a new facility (registered for a LEED Gold rating) designed by Ralph Johnson, of Chicago’s Perkins + Will. The idea is for the company to embody what it professes—to “walk the talk,” as the saying goes—by installing the European-style modular walls and raised floors it hopes to sell more of in the future.
These products cry out for Haworth to get involved earlier in the design process, and to promote this, the company has created a rendering and presentation studio complete with a wall-size screen that lets customers visit a virtual version of their own offices (see “Rendering the Future” on opposite page). One thing in favor of Haworth’s modular walls is the U.S. tax code; “office equipment” such as wall panels can be depreciated much faster than traditional fixed walls, giving companies a huge tax benefit.
The latest evidence of Haworth’s transformation is Kapow!—a new line whose most interesting components were unveiled at NeoCon last year. Bianchi hopes the products, which he describes as having a more global appeal than previous lines, will eventually account for a third of Haworth’s sales, a proportion that suggests just how large a transformation he (and Dick Haworth) has in mind for a firm that in the past was known more for cubicle dividers with electrical connections than fashion-forward design. Haworth says the goal is not just to sell existing customers nicer stuff but to snag new transnational customers with products that will work everywhere. “If we do it right, we should be able to have better products at a more reasonable cost.”
Unfortunately from a branding perspective Kapow! is a bit of a mess. Instead of a single coherent identity, the new line’s work surfaces and storage systems are called Patterns, while the panels are named Compose and the movable walls, Enclose. Kapow! isn’t even its official name but will have to suffice because the company decided that a single overarching moniker for the new line might frighten away customers who are phobic of all-in-one solutions. “We don’t want to be proscriptive,” Bianchi says almost apologetically, noting that Haworth sells single chairs and various other components every day. “We’re not arrogant.”
The new line is not just branding impaired, it’s also historically challenged. Haworth has never been known for cool, after all. There have been no iconic designs by Charles Eames, George Nelson, or Florence Knoll. Collectors of vintage furniture trolling Craigslist and EBay do not wonder if older pieces might still bear the original Haworth label. Its customers weren’t focused on aesthetics; they were after function and value, which were largely what they got. Perhaps there is sense in this: Once the age of hardwoods was past and the era of cubicles and ergonomics dawned, office furniture came to seem ugly almost by nature, like so many apartment buildings in New York or the vinyl-clad homes springing up around western Michigan. Given the nature of the beast and Haworth’s own pedigree, it shouldn’t be surprising that the company’s previous attempts to jazz up its products produced some of the same twee Modernism you might recognize in a Michael Graves teapot.
In the design arena Bianchi’s role is not to say “goodbye to all that” for existing product lines but to create something new without alienating traditional customers who never bought into the Dilbert critique of the office cubicle. At best the new stuff might make architects and designers think of Haworth in the same spec as Herman Miller or Knoll or Vitra. At worst Bianchi’s job is to make things less homely, giving budget-conscious customers something better to buy, perhaps a reason to freshen up the old office.
Indeed 42-year-old Bianchi is a product of fashion-conscious urban northern Italy, where looking like a slob is simply not the social norm. An unpretentious sort who, nevertheless, on the day I visited wore a classy pin-striped suit and European spread collar, Bianchi drives a BMW 645 coupe, “black with light interiors.” And while he lives in a normal house, he’s looking for one that isn’t. “I think I know how a product should look,” he says over a relaxed dinner after work. “And I know nice and ugly often cost the same.”
Haworth has already gone a long way toward heightening its corporate design consciousness—and becoming the most international of contract furniture makers—by acquiring more than two dozen companies all over the world since 1990, including Mobilier International (France), Kinetics (Canada), Comforto (Germany) as well as Castelli, all of them bringing an expanded design vocabulary along with revenue and customers. These acquisitions also broadened Haworth’s product line: the purchases of SMED and InterfaceAR, for example, have helped the company expand into “architectural interiors” by adding movable walls and raised flooring to the mix.
Somewhat paradoxically, Haworth’s self-transformation has been abetted by its private-ownership structure. Unlike competitors such as Steelcase, Haworth doesn’t have publicly traded stock that it can use for acquisitions. But it doesn’t have Wall Street to satisfy with quarterly earnings reports either. Instead, Dick Haworth reports with satisfaction, it has ample cash, virtually no debt, and no one to answer to but its family owners. Being private “gives us the ability to move quicker,” he says. “It means we can stay the course. I love the freedom we have as a private company.”
Only the marketplace can decide whether Kapow! has real impact, but based on an early peek at the new Patterns components (designed in collaboration with Milan’s Studio & Partners), the products do represent a step forward for the company. With tables, benches, and storage units all derived from a single shape—think of a giant beefy staple—the stuff looks solid, crisp, and dignified while striking an interesting bargain between transparency and demarcation. A little retro, a little Asian, it’s minimal without being negligible and—in the context of an office—possibly even refreshing. Imagine that the best parts of the West Elm catalog went to work, and you will have some idea. “We’d like to be working with world-class architects and designers,” Haworth says, not just for the obvious reasons but because as an organization “it stretches you.”
But getting beyond the company’s traditional clients to woo trendsetting architects and designers won’t be easy. Haworth isn’t typically the first company these important clients look to, something to which Todd DeGarmo, of Studios Architecture, can attest. In designing the interior of the new Bloomberg headquarters in New York, DeGarmo considered Knoll, Vitra, Unifor, and Steelcase. Unifor won out, as it did for the new IAC/InterActiveCorp. headquarters in New York, designed by Frank Gehry. In past experiences with Haworth, DeGarmo notes, he found the showroom “schizophrenic” and “confusing to clients;” he says its reps seem to be “just trying to make a sale” rather than helping him work with clients to develop creative solutions.
If nothing else, the timing of Haworth’s attempt at self-transformation looks auspicious. After a devastating downturn following the dot-com collapse (which slashed business by 40 percent from late 2000 to early 2004), the office furniture industry has rebounded strongly, climbing back to roughly $10 billion in U.S. sales last year. It is a relatively small sector—$10 billion is just a year’s sales for Kellogg Co., down in Battle Creek—and in some ways a strange one. Large products with fragile veneers, impatient customers, and a high degree of customization mean that much of the manufacturing for the U.S. market still occurs domestically. Innovation can be tough and successful designs quickly inspire copycats, so new developments are kept under careful wraps to prevent instant knockoffs. “You can’t patent aesthetics,” Bianchi observes with a smile.
With global sales that reached $1.4 billion last year, Haworth is one of the industry’s biggest players. But unlike its publicly held competitors, it doesn’t disclose profits; two industry insiders said that the company likely nets 6 to 8 percent of sales, meaning it probably enjoyed pretax net income last year in the neighborhood of $100 million.
The timing of Haworth’s transformation occurs against a backdrop of increasing design consciousness throughout the economy. Companies such as Target, Apple, and Nissan owe much of their recent success to fresh design that sets them apart aesthetically from such otherwise fearsome rivals as Wal-Mart, Microsoft, and Toyota. In an age when companies appear to have lost much of their pricing power, people seem willing to pay a premium for good design. “Today design is bread and butter,” Bianchi says. “I believe it’s time to innovate the way we consider it.”
As for the Bianchis, they’re becoming more American even as Haworth grows more global. Franco reports that the family now has lots of friends in Holland; and although he still eats at home more than he used to in Europe, he’s found a couple of local restaurants that he likes. Meanwhile his two sons are so thoroughly acclimated that on a recent visit to a Club Med in the Caribbean, people wondered, How can an Italian couple have two children with such strong American accents?