By Karen Dybis
July/August 2012
It is painful to Hackett because he knows there is a better way. There is a better way to connect people to one another. There is a better way to connect people to their environment. There is a better way for people to do their life’s work.
As Steelcase celebrates its 100th anniversary in business, the venerable Grand Rapids company faces the next century with a kind of excitement, Hackett said. Its job is not that of just designing new desks or office chairs, although it does that rather well. Rather, Hackett said its purpose is to find new ideas or “human-centered solutions” for old problems. And that is exactly how Steelcase has become a $2.75 billion industry giant - by finding ways for humans to not just survive but thrive within their work environments.
“When you think about a company achieving the mark of 100 years, it’s really a significant event. In fact, companies that make it to 100 are in a very rare group. So we’re really proud of that,” Hackett said. “How do you stay in business that long? The company changes. The company has to change in order to have that longevity while retaining some magical aspects that make it a special story that carries from generation to generation.”
The introspective Hackett also seems to be at the precipice of his own. The former football player turned C-Suite exec is always thinking, questioning and challenging himself to understand his company and his place within it. As an executive, the 57-year-old Hackett has been through economic upswings and downturns. He has seen Steelcase at its peak, and he has held the helm during sizable employee terminations.
As the leader of a publically traded company with nearly 10,000 workers, Hackett realizes he cannot personally meet every intern, get to know every employee, have lunch with every customer - although he’d like to do that and more. But what he can do is try to stretch the definition of a CEO and that of what some people might see as only an office-furniture company. As Steelcase looks forward, Hackett is doing his best to inspire himself and its employees to think about how people use their equipment, how technology impacts everyday workplace exchanges and how Steelcase can take the mundane and raise it to the sublime.
Mission for Future
This is not about how to design a better cubical. Rather, Hackett’s mission and that of Steelcase by proxy is to improve the employee condition. The past 100 years weren’t about building boxes to contain people, Hackett said. The next 100 years are going to be about helping humans be their best within an office setting. And that means making it easy to set up a projector, plug it into your laptop and connect to the Internet via whatever tool best suits your style.
Steelcase also is expanding into other areas, focusing much of its research and product development into the needs of the growing health care and education industries. By diversifying its customer base, the company hopes to avoid some of the downturns it experienced during the past two recessions and to find new products that resonate with any employee or organization. To date, most of its core customers are in the corporate world, colleges or universities as well as government entities.
Watching how people work - or even how they don’t - is a key part of what has changed the way Steelcase itself works. Hackett calls it the “ethnographic method,” or going out into the wooly work-a-day world to find out how Homo sapiens get things done. In particular, Steelcase is studying how people interact within their office environments with technology, whether that is a desktop computer, an iPad or a smart phone.
“When you have so much change like we’re talking about (in regard to technology) there’s this question of whether that actually is a sea of chaos or trouble or a sea of opportunity,” Hackett said. “An observation that was made was if we understand the way humans react to (technology) we actually could have a clue to what the future could be.
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“Steelcase is investing an extraordinary amount of time and effort to understanding (human behaviors) ethnographically - this is a term which means you follow around people and observe their behavior. You don’t necessarily interview them you study them like an anthropologist would,” Hackett explained.
“We find these persistent patterns of behavior around how to operate a piece of technology. We know for example that the more complex you make this the less they’ll use things. You go, ‘Well, that’s well known.’ But generally people won’t say that in an interview because they don’t want to appear like they don’t know how to operate something,” Hackett added. “This insight-driven product development is something that we fell in love with in our relationship with (design firm) IDEO 10 years ago and it’s now fueling the company in extraordinary prolific ways of bringing in new ideas.”
Hackett is particularly proud of products such as media:scape, which supports collaboration by easily allowing people to display content from various types of computing devices. In 2011, Steelcase introduced smaller and mobile versions to extend the media:scape portfolio. Although the product is relatively new, it is growing in popularity and shows great promise in the years to come, Hackett said. The magazine Fast Company actually called the system “brilliant” and “innovative.”
What makes products such as media:scape so unique, Hackett said, is that a person is comfortable with the technology they have mastered. And if you give an employee tools that show their competencies - rather than show off their inadequacies such as the poor fool trying to hook up a projector to their laptop - then you will create a much more productive workforce.
“If you have an iPhone or an iPad, you use it and you know how to operate it. (By adding media:scape), you can drive the meeting,” Hackett said. “This came from us watching people struggle with trying to plug their computers in to project them. I’m really sold on this virtue being a way for companies to grow in the future like Steelcase.”
Another challenge is staying competitive within a fairly well-organized and strong office-furniture industry. It is especially interesting considering how many of Steelcase’s competitors are located within miles of its Grand Rapids headquarters; the West side of Michigan is somewhat known for being home to such great companies as Haworth and Herman Miller. (Other significant competitors are HNI Corp., Kimball International Inc. and Knoll Inc.) All are recognized for their commitment to sustainability, employee relationships and creating some of the best equipment and processes around.
Steelcase comes into its second century in fine form. Fiscal 2012 was its second year of solid profitability following the global recession of 2009, during which the U.S. office furniture industry’s business dropped an estimated 30 percent. The company’s net income increased to $57 million, compared with $20 million in the previous year. Steelcase also reported organic revenue growth of 14 percent, driven by 19 percent organic growth in the Americas segment.
This is welcome financial news for Steelcase, which had experienced two years of losses after decades of positive revenues gains. The company lost $11.7 million in 2009 and $13.6 million in 2010. Its employee count dropped dramatically from 28,000 when Hackett first became CEO to just around 10,000 today. It has closed dozens of factories - going from a high of 57 to less than 20 - over the past few decades. Hackett considered these lean years as a time for the company to regroup and rethink how it approaches its long-term growth during recessions.
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A Look Back and Forward
To understand where Steelcase is today, it is important to understand the company’s history. Steelcase began in 1912 as The Metal Office Furniture Company in Grand Rapids. The company received its first patent in 1914 for a steel wastebasket. It might have been a bit heavy, and it might have been a bit expensive to produce. But when you consider how many people in the workplace smoked - and how easily a straw wastebasket could go up in flames - you come to see how innovative the steel wastebasket really was.
“The founder brought 25 patents with him about how to bend simple flat steel into boxes, which allowed us to use steel as a case good or furniture and not have it be too heavy. The innovation and engineering for this was extraordinary in its day, in 1912. And in a way the company celebrates this engineering and innovation even today. It knows its next day is only certain if it masters that,” Hackett said.
Innovation - it is a word that Hackett uses frequently in his conversations both with employees, investors and the media. Anyone could make a garbage can, he would argue. But Steelcase then understood how people behaved at work; they wouldn’t necessarily look for a proper place to dispose of their cigarettes. That insight created the product. The company changed its name to Steelcase in 1954 and became a publicly held company in 1998.
Today, what Steelcase calls its “portfolio of solutions” covers three key parts of a workplace: interior architecture, furniture and technology. The company has three core brands - Steelcase, Turnstone and Coalesse - and several sub-brands, including Nurture, its health care division.
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The glue that holds all these brands together is how they focus the office-furniture company on the two things that affect everything it does: globalization and technology. More and more, Steelcase’s customers are outside the United States. According to the company, one-third of its revenues now come from international sales.
“We’re global today not because we had a desire to be everywhere; it’s because our customers went everywhere and we ended up following them,” Hackett said. “Companies are multinational. -¦ You can have teams of people working on the platform of a car that are manned from various countries in the world. They actually join in the telepresence and work collectively to drive the development of the products. This is a unique time in the history of business that you have that kind of point of view.
“Technology has an exponential affect on the potential of change,” Hackett continued. “In our lifetime we’ve never seen technology slow down. It is a simple equation that goes something like this: Every five years the cost of your cell phone drops by one-tenth and the power goes up by a factor of 10. So something that cost $399 in 2012 will be $3.99 in 2022 - it’s hard to imagine that something so powerful can continue to be more powerful and only cost less than the cost of an ice-cream cone.
“Steelcase intensely studies how people’s work lives are changing because of that. It creates all kinds of opportunity because the spaces are out of date because of the technology,” Hackett added. “In fact, people can move to spaces now without regard to where they have to work because mobility is so high. But we’re still going to those spaces to make them better.”
Hackett said he also is intrigued with how material science will affect Steelcase and a variety of other industries in the years to come.
“One of the best stories in the world today is the story of carbon fiber finding its way not just into tennis racquets or golf clubs but into the airplanes of the future. So the new Boeing jets are hitting drag-to-lift ratios that they never thought that we’d ever achieve. They’re going to change the way flight patterns happen,” Hackett said. “We’ll be able to have non-stops from points in the United States to other points in the world that couldn’t afford it before. Cars are going to adopt this and there’s an incentive in airplanes and cars for fuel efficiency but there’s also in our world. Because these are products that people handle and they move and they touch and have them not cost as much to move and ship there’s a big advantage to reducing weight. So the future of material science is a big beginning along with technology and globalization.”
Collaboration and the Untraditional Office
Key to Steelcase’s success is its ability to see the future, Hackett said. And if you are working at Steelcase, the future seems particularly bright. At least, you might want to adjust your attitude to feel that way if you want to work with Hackett. After all, this is a man who learned the lesson that there’s no “I” in team from one of the best - Bo Schembechler, his college football coach at the University of Michigan.
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“It was my belief that hitting the 100th anniversary gave us the right and endorsement to actually speak about why we wanted to be here longer. What was it about our command of business so to speak that would help us continue down that path?” Hackett asked. “We thought in 2012 what the world needs is an optimistic perspective about the future. There’s so much news about the stresses and the world’s struggles in various wars and various emerging markets. But if you’re not careful you’ll convince yourself that there is no future. We actually saw the opposite of that.”
Hackett, an Ohio native, graduated from the university in 1977 with a Bachelor’s degree in General Studies. His first job was at product giant Procter & Gamble Co. in Detroit, a company and a city he grew to love. Hackett keeps an eye on Detroit and its challenges; Hackett said he is still close friends with Detroit’s Mayor Dave Bing, who served on Steelcase’s Board of Directors. Bing also is featured on Steelcase’s “100 Dreams, 100 Minds, 100 Years” anniversary-celebration website, outlining his hopes for Detroit and the city’s future.
Hackett has been a part of Steelcase’s history for the past 31 years, joining the company in 1981. In those first years, Hackett held a variety of sales and marketing positions in the company, including regional manager in Houston in 1984 and director of national accounts from 1986 to 1990.
In 1993, Hackett became president of Turnstone, a Steelcase subsidiary exclusively to furnish small businesses and home offices. According to Steelcase, the Turnstone model was “designed to service new ways in which people do their work,” perhaps giving Hackett his first taste of how fresh ideas can affect how people work with and around their furnishings.
A year later, Hackett became executive vice president of Steelcase Ventures, where he was responsible for the design and development of products for non-contract furniture industry customers in addition to developing new company opportunities.
A short stint as executive vice president and chief operating officer of Steelcase North America was soon followed by Hackett being named president and CEO in December 1994.
The years since then have had their share of ups and downs. Among the worst have been the recessionary ones - forcing Steelcase’s management team to cut jobs and close factories. It is something Hackett talks about with regret, especially in light of the company’s history of respecting its employees on multiple levels.
“The founders had this dream of a different kind of management between the management and its employees. It was very egalitarian; the notion that everybody was on a kind of team together, it was a really special principal,” Hackett said. “The company more recently has gone through a lot of restructuring; it got rid of a lot of jobs in Michigan. It was difficult for the culture because of the way we see the equity of everyone’s interest in that. It was not an easy decision. We had to be fit for the future; we had to do these things.”
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It is easy to see why Hackett rose so fast within the company. He is a mix of business executive and motivational speaker. He is a natural public speaker; his body language is clear and decisive, yet he seems relaxed even in a suit. He also seems to possess a sharp sense of humor (thus it comes as no surprise to find out that one of his favorite movies is “Planes, Trains and Automobiles.”) He takes time to chat with passers-by, never losing touch with the conversation going on around him. It is easy to see that he lives and works with an intense curiosity about everything around him.
Everything about Hackett speaks to his direction for Steelcase. Work today is less about individuals and fixed work environments, he notes. Rather, it is about collaboration - a “we” paradigm. And people are mobile, moving about their spaces with ease. While some customers might work from home or telecommute, most of the company’s focus is on those employees who are within a traditional office setting that has grown more and more untraditional by the minute.
His lifelong ambition, Hackett once said, is to understand the nature of work. And that means understand the nature of human beings. As a CEO, Hackett loves new ideas - there is a reason he has attended pretty much every TED (Technology, Entertainment, Design) conference ever held. While grasping what makes a human work may be a long trip, but it is one that Hackett is willing to make.
“Over the years, the evolution of the company came with what our customers were driving in terms of demand and transformation,” Hackett said. “We watch what our customers want and need. And then we provide it.”
