Herman Miller's Leap of Faith

Back in 2000, the bosses had discussed how Herman Miller could expand beyond its core business. "Historically, the heart of Herman Miller has been about innovation," Walker says. "So we wanted to use that to create new vectors of growth that were not just about office furniture. We wanted to draw the circle bigger." And it was to be a big circle indeed. "Five years out, Mike wanted Purple projects to be two to three times the size of our current market," Miller says.

The areas Miller's team of engineers, designers, and business-development specialists identified as promising included environmental aesthetics (sound, lighting, and such), digital lighting, technology integration, redefining space, and the design and construction process--an area rife with wasted materials and effort that was begging to be reinvented.

It's an approach that takes a page from Christensen's book, which suggests that companies aim their innovation efforts at the jobs customers need to get done, rather than incrementally improving products they already produce. "In every disruption, you transform a task that used to be so expensive and complicated that only people with a lot of money could pull it off," Christensen says. "You make it so foolproof and idiot-simple that a whole new population that formerly didn't have the money and skill can now do it."

This year, for example, Herman Miller will debut a modular electrical system that delivers exactly on Christensen's promise: It allows users to easily move around data ports, phone lines, and lighting, and program them with a simple handheld device, making reconfiguring office space "idiot-simple."

The potential for some of Purple's innovations appears pretty substantial, and they certainly draw the circle bigger. But protecting what looked like pie in the sky back in 2001 took real courage. While Volkema refuses to quantify the company's investment, it was, he says, "not pocket change." And with Purple's profitability years away, Miller admits he occasionally had his own dark nights of the soul. "It would have been, by most standards, the obvious thing to cut," he says.

Looked at another way, though, it was exactly the last thing to cut. "We didn't want to just keep adding more and more dollars to make what we were already doing just a little bit better," says Volkema. "We knew that we get our highest margins and growth rates when we invent something new." It's a lesson rooted in Herman Miller's history. During the Depression, the company was on the brink of bankruptcy. DePree, who had bought the business, made a radical decision. He would move Herman Miller away from its core business--period reproductions--and make "modern" furniture, an idea that horrified traditionalists. DePree also decided to use external designers to come up with new products. "It was a huge change in direction, for a sleepy furniture company to be design driven," Walker says.

Another huge change came in the 1960s, when DePree and his son, Hugh, decided the furniture business needed to find new sources of revenue and hired Robert Propst to look for them. His insight: With more and more workers moving from factories into offices, companies would need ways to house them all. Voilà! The Action Office--the original cubicle--was born. Walker hopes to keep that disruptive spirit alive. "If today you see Herman Miller as a large innovative furniture company, five years from now, I hope you see us as an innovative company with a large furniture business," he says.

Linda Tischler (ltischler@fastcompany.com) is a Fast Company senior writer.