Herman Miller's Leap of Faith

Ditching the Water Carriers

One of the first things a visitor to Herman Miller sees when entering the Design Yard in Holland, Michigan--the farmlike facility with stone walls and red silos that houses both the company's design studio and its executive offices--is a statue beside a small stone pond. Projected in the water by beams of light are the names of employees who have worked for the company for at least 20 years. The statue, called Water Carrier, is based on the Native American belief that every job, no matter how unskilled, is critical to the survival of the group. It's a philosophy that has been at the core of the company's values since Herman Miller and his son-in-law, D.J. DePree, bought out the shareholders of a little Midwestern enterprise called the Michigan Star Furniture Co. in 1923. Herman Miller currently counts more than 1,200 water carriers in its ranks.

So it was excruciating when Walker, then president of Herman Miller North America, confronted Volkema and the rest of the executive team in late 2001 and told them to quit hoping for a quick turnaround and start planning for brutal cutbacks. "Brian really heralded that this downturn was going to be longer and more significant than any of us were hoping to admit," says Volkema. "We kept thinking in a couple of quarters this thing would turn around."

Five years later, Volkema, a tall, slim man with wavy dark hair, an easy smile, and a modest manner, still seems anguished by the memory. "Ultimately, we had to tell 4,500 of our 12,000 employees that we no longer had work for them," he says, as he shifts uneasily in his chair, his shoulders hunching a little. "But we had to do something to make sure some of the folks made it to the other side." Gary Miller (no relation), EVP and chief development officer, chimes in: "It was god-awful."

Through a long series of meetings that took place daily in the villagelike space in which the leadership team's offices are clustered, the group debated its options. It finally settled on a set of strategic choices about which businesses the company was fully committed to supporting and which had to be sacrificed to save the rest. Out of the company's five primary initiatives, two would be jettisoned and three preserved. The decision wasn't easy; the two on the chopping block were growing businesses. One was Herman Miller RED, a ready-to-assemble line of furniture sold via the Internet. The other was SQA (simple, quick, affordable), a middle-market brand that had been growing nicely.

Meanwhile, there were wrenching human decisions to be made. In one case, both a husband and wife worked at a unit slated for termination. Should one be transferred to another business? As Volkema wrestled with that decision, he got an email from a manager reminding him that another employee was the only wage earner in his family. "There was a whole year when I didn't sleep through the entire night," he remembers wearily.

Volkema and Walker also insisted on delivering the bad news themselves. Walker still vividly remembers the day he and Volkema shut down their plant in Georgia. Afterward, workers came up to express their concern for the two of them. "I can't think of anything that would rip your heart out more than for these people, who you just laid off, to tell you that they hoped you'd be okay," Walker says. Then there was the real estate. Nearly 1.4 million square feet had to go, including some award-winning properties and one Frank Gehry-designed building.

"We had to tell 4,500 of our 12,000 workers we no longer had work for them. But we had to do something to make sure some of the folks made it to the other side."

At the same time, the team was already mapping plans to capture the next upturn. In office furniture, it committed to fast-tracking an expensive next-generation cubicle, My Studio. That system will debut at NeoCon. Douglas Ball, the system's outside designer, recalls getting a call from a Herman Miller manager. "She said, 'We're cutting back; we're hurting, but we're going to rebuild. We're going to put all our systems resources into one project, and this is the one.' "

Purple Pie In the Sky

Down a long hall in the Design Yard, behind a plain brown door discreetly lettered with the word "HMCOLab," is Herman Miller's top-secret R&D operation, enigmatically code-named "Purple." You must sign a nondisclosure agreement to get in. But when you do, you're likely to be greeted by EVP Miller, a furry Ewok of a man whose job is to be the company's chief disruption officer.