Ka-Pow!

More than a display of wares, Haworth’s NeoCon showroom last year was a declaration of intent. With the expanded and renovated space at Chicago’s Merchandise Mart—highlighted by a glowing indoor pool and the transparent panels of a raised floor—Haworth announced its first real foray into the realm of aesthetics. No longer content to be a supplier of cubicles and workstations—and armed with innovative elements from its newly acquired subsidiaries—the venerable Holland, Michigan, manufacturer was now presenting itself to architects and designers as a full partner. For some the abrupt about-face was a welcome and timely change. Others found themselves asking which new company had taken over the formerly staid showroom—and what had they done with Haworth?

“There’s no question they’re trying to change their image,” says Douglas Gregory, an office-furniture consultant based in Grand Rapids, Michigan. “But you don’t turn a Haworth around just like that because you’ve bought a couple of design companies. Designers may produce beautiful lines, but then these are given to manufacturers who are used to forming straight edges. And I also have to wonder whether a company like Haworth can or should try to change an image that has been so successful for so many years.”

Haworth’s sea change may at first appear surprising and even ill-conceived. Its product line may be viewed as lackluster by the design community, but the company’s carefully forged reputation for durable products, reliable service, and above all, value has produced consistently excellent results. Born in the garage of Gerrard “GW” Haworth, a former high school shop teacher, Haworth’s revenues exploded from $1.25 million to $2 billion between 1964 and 2000. Its workforce increased more than 100-fold during the same period. What reason was there to change?

“Sitting here in western Michigan, I watched as the Detroit automobile manufacturers consistently lost their market share to Toyota and Honda,” Dick Haworth recalls. CEO of Haworth since 1976, he is the architect of his family company’s latest and most ambitious iteration. “From that experience I concluded that we had to learn to compete in foreign markets, to provide service to global customers. We had to evolve from a western Michigan company doing business globally to a global company that was based in western Michigan.”

Under Dick Haworth’s direction, Haworth quietly but steadily expanded its global reach and footprint. Many of Haworth’s purchases—such as Germany-based Comforto, in 1988; and Castelli, of Bologna, Italy, in 1995—were conceived to introduce innovative design elements into Haworth’s tradition-ally conservative lexicon. Haworth also acquired companies with products that would enable it to offer total design solutions to architects. The 2000 acquisition of Calgary’s SMED added movable walls to Haworth’s expanding arsenal. The 2003 purchase of Interface AR gave Haworth raised flooring with HVAC capabilities. “I don’t think anyone has bought as many overseas companies as Haworth has,” says Michael Wolf, editor in chief of “The Monday Morning Quarterback,” an industry newsletter based in Highland Park, Illinois. “Aligning all these companies will be a very difficult task. But they now have a spectacular range of European products.”

Despite its calculated campaign into the territory of high design, Haworth may have difficulty in divining an authentic design identity. Unlike most of its major competitors, it has little history or experience with high-level design production or marketing. An active CEO who travels at least twice each year to Europe and Asia, Dick Haworth knows that designers and workers on these two continents conceive space in a far different manner than do their North American counterparts—and that the conservative nature and long product life of the domestic office-furniture industry complicates the introduction of foreign design elements into the North American workplace.

Even if it should succeed aesthetically, Haworth will still have to significantly augment its allure for architects and designers—and to convince them to begin their collaboration with the company far earlier in the design process than they might were they simply stacking cubicles and workstations into an already sectioned office space. “Certainly the idea of one-stop shopping for this type of architecture is a new one,” Dick Haworth concedes. “But I believe people will eventually learn to appreciate the value in it. There is no way any of us can foresee the future. Over time I’ve learned that every time you introduce the ‘ultimate’ product to the market, you soon discover it can be improved. The best any of us can do is to create an environment that can adapt to conditions and demands we can’t possibly foresee.”

While Haworth is resolute in its intention to evolve, the company does not intend to abandon existing customers or its market niche. Last year it reissued Unigroup Too, a successful product line introduced in 1976 that counts a current installation base of $7.5 billion. Featuring T moldings and other upgraded aesthetics, the new Unigroup system is completely retrofittable with the original. “What we’re doing here is evolutionary, not revolutionary,” Franco Bianchi says about the company’s transformation. A former mergers and acquisitions consultant who helped negotiate the sale of Italy’s Castelli to Haworth, the Bologna, Italy, native was hired by Haworth and, in August 2004, was named North American chief operating officer. Many observers—and Haworth veterans—believe he is being groomed to be the company’s next CEO when Dick Haworth steps down.

“Yes, we are venturing into uncharted space with some of our design. It’s no longer about producing a beautiful chair or functional panel system. The business is now about finding a new way to realize space. But as we move toward this we’ll continue to provide great performance at an affordable price. This is our identity, and we certainly aren’t going to lose it.”

Haworth’s newest concept, called Kapow, is a total office system with a broad palette of elements that can be used to create an equally broad range of office environments. The system’s desks, workstations, panels, walls, bridge elements, and floors are connectable, permitting myriad configurations and layouts. Kapow is emblematic of Haworth’s change of course, of its evolution from furniture supplier to design partner. “This system is permissive, not prescriptive,” says Rick Glasser, a member of Haworth’s new product team and a 17-year company veteran. “We want to give the architecture and design community the tools they need to modify, to make slight adjustments. Besides, we’ve learned from our competition how to screw up a relationship with clients: just tell them that your one product or system solves all their problems and then try to shove it down their throats.”

The success of Kapow, and of a large part of Haworth’s long-term strategy, will depend on whether the design community—and corporate customers—will accept them as a design partner and not just a material source or supplier. “In many markets this total solution is a hard sell,” Wolf says. “It requires architects, contractors, and the supplier to collaborate much earlier than they might in a furniture-only solution. This is a different process from putting up drywall and then going out and getting three bids for workstations.”

There are several factors that should leverage Haworth’s ability to evolve and expand. As a private company Haworth is probably better poised than its publicly held competitors to implement industrial and procedural changes. It does not have to respond to shareholders grown jittery after one or two disappointing quarters. And while Haworth’s global integration, its refashioned image, and even the renovation of its corporate headquarters may seem like a game of catch-up, many industry analysts laud the company’s business acumen and its timing, particularly in its feel for the global market. “Unlike the competition, which built global strategies on selling North American solutions abroad, Haworth understood that it needed to start thinking about what was acceptable to local markets,” Gregory says. “You take the things a North American company does well—running a manufacturing facility and building a distribution system—and you blend them with local knowledge and people. This is a strategy that will be increasingly successful in the future.”

Wolf credits Haworth with letting the competition innovate and experiment, and cleverly leveraging the mistakes of others. “It’s not as if they’re doing anything anyone else isn’t doing,” he says. “They’ve just made all the right moves at the right time and at the right price. Everybody needs top de-sign now, so they’ve gotten top design. Everybody needs to be green, so they’re green as well. Everybody needs to be global, and they’ve gone global. And in the overall market, even if a customer still insists on going out and getting three bids, it’s a good bet that Haworth will be one of those three.”