Michigan business leaders, past and present, know a thing or two about reinvention. Henry Ford, best known for the Model T and perfecting the assembly line, launched the modern aviation industry in the 1920s with his son, Edsel Ford. The company’s experience building the world’s first all-metal airplane — the so-called Tri-Motor — came in handy a decade later when the U.S. entered World War II.
In addition to being an entrepreneur, the elder Ford was also resourceful. In the 1930s, he owned what today is a portion of Interstate 94. As a Wayne County road commissioner, he requested that the county buy the two-lane road from him. The other two commissioners turned down the offer. Never one to forget a slight, when Ford received a government contract to build airplanes in the leadup to World War II, he built a factory in adjacent Washtenaw County, next to Willow Run Airport. The reason: He didn’t want Wayne County to gain any tax revenue from the plant.
The only problem was that the rear of the factory, where the completed planes emerged, straddled the line between Wayne and Wash-tenaw counties.
In quick order, Wayne County officials established a tax on all airplanes that entered the county from any factory in a neighboring county. To avoid the tax, Ford ripped apart the rear of the factory and added turntables and new exit doors. As each plane rolled off the assembly line, it was placed on a turntable and rotated 90 degrees so that it emerged from the plant in Washtenaw County.
The lesson here is that entrepreneurs must be able to quickly adapt to changing situations, take risks, and plan for the long term. One reason a company like Ford has lasted for more than a century is because its leaders can manage the moment while anticipating the future, says Stephanie Bergeron, president of Walsh College in Troy. “Focus on your customer and what he needs and wants, and know how his needs will change,” she says.
One reason Dearborn-based Carhartt Inc. is 123 years old is that its work clothes have become fashion statements. In fact, they are so popular that a Detroit-area scaffolding company found a way to turn its own profit on Carhartt’s legendary product line.
Madio Corradi, owner of National Ladder & Scaffold Co. in Madison Heights, was inspired when customers started asking his employees where they got their work clothes. Why not fill a need for his customers, he thought, and start a side business selling the Carhartt clothing?
“We would bring it in, and bam! You’d go in the store and the shelves would be empty,” says Paul Marderosian, vice president of Contractors Clothing, which, as part of National Ladder, shares the same building.
The customer base for the overalls, jeans, coveralls, jackets, shirts, and other durable clothing includes farmers, railway workers, construction workers, outdoor enthusiasts, and even rap and hip-hop artists, who took to the style in the 1990s. “They liked the matched sets,” Marderosian says of the musicians, explaining that they favor ensembles of the same color. “They called them hookups.”
Marderosian says Contractors bought $1 million worth of Carhartt clothing last year; the line represents about 40 percent of his business.
Carhartt sells its clothing online and through independent retailers and retail chains such as Meijer and Sears. In 2010, the company added its own retail outlets. Linda Hubbard, COO and executive vice president, says the company is scouting for a retail location in metro Detroit. (The nearest Carhartt outlet is in Chicago.)
Internationally, the company distributes its time-tested work clothes, along with more modern casual wear, through London-based Work in Progress in Europe. Overseas, BMXers and skateboarders have made the clothing fashionable — much like hip-hoppers did in America.
Hubbard says despite the fact the company continues to use its traditional fabric, and in spite of the popularity of its time-tested basic styles, they are always looking for ways they can be innovative; she says that in addition to operating retail outlets and offering casual wear, a new line of shoes is in the works. With every product launch, however, the company remains true to the guiding principle set down by founder Hamilton Carhartt: “Set a standard of excellence to which all others would aspire.”
Hamilton Carhartt, who added a second “t” to make his name more distinctive, launched the company after producing an overall garment for a railroad engineer in 1889. From there, he rode the rails and took orders at depots nationwide.
Mark Valade, Carhartt’s CEO since 1998, is a fourth-generation descendant of Carhartt. His mother, Gretchen Carhartt Valade, transcends an active work schedule by supporting the arts — she made a multimillion-dollar endowment to the Detroit International Jazz Festival, she operates the Dirty Dog Jazz Café in Grosse Pointe Farms, and she is co-owner along with Tom Robinson of Mack Avenue Records in Harper Woods.
William Hardy, vice president of business planning and a third-generation Carhartt employee, says working for the company — 2011 revenue was $530 million — is like a badge of honor. “Somewhere along the line I learned I was a humble servant of the brand, with a legacy to carry on and to protect it,” he says.
How old is SmithGroupJJR? Old enough that, when it was founded, Charles Darwin had yet to publish his revolutionary book, On the Origin of Species. That happened six years after founder Sheldon Smith established his firm, in 1853. Perhaps better known to longtime Detroiters as Smith, Hinchmann & Grylls, the architectural/engineering/planning firm changed its name to SmithGroup in 2000, and merged with subsidiary JJR LLC last November to create a unified brand.
“We have a very strong culture in terms of pride in the legacy,” says Carl Roehling, president and CEO of what is the oldest continually operating architecture and engineering firm in the United States. “The great thing that we do is (design) things that outlive us.”
SmithGroup has evolved throughout the years, reinventing itself to remain viable. During the Great Depression, the firm tenaciously survived, in part, by cutting its 250 employees to six.
Afterward, the company was strong enough that it was able to grow to include a presence in Europe. “We never wanted the sun to set on the SmithGroup, so we decided to expand internationally,” says Jeffrey J. Hausman, senior vice president and director of the firm’s Detroit office. It also offered services to encompass every step in the building process, from design through construction.
In the early 2000s, the company decided it had diversified too much, and whittled its operations down to its core competencies: design, architecture, engineering, planning, and interior design. It received the first-ever platinum rating for Leadership in Environmental Engineering Design from the U.S. Green Building Council (for the Philip Merrill Environmental Center in Annapolis, Md.) and has become known for creating sustainable design. The firm also renovated five floors in the Guardian Building — a 1926 SmithGroup project — and set up its Detroit shop there. About 170 of the firm’s 800 employees ride a Guardian Building elevator to work each day.
Hausman says SmithGroup owes its longevity not only to focusing on what it does best, but also to its ability to take risks, anticipate change, and shed dysfunctional parts of the business. For example, its many projects for the University of Michigan included a $5,000 consulting project to resolve a dispute between an architect and a contractor, as well as a project to design and engineer the $226-million U-M Life Sciences Institute, completed in 2003.
Roehling says investing in intangibles with no immediate return on investment is another reason why the company has endured so long. Examples include: building systems to share knowledge within the firm, creating a diversified staff, and contributing to employees’ growth and development — all items with no discernible metrics.
As the company has evolved during its 159 years, it has changed skylines in Michigan, across the nation, and in Europe and South America. It has performed work for the Big Three, automotive suppliers, and every major university in the state. The company was part of a team that produced many of the region’s most notable structures, including Ford Field, Comerica Park, Hart Plaza, the Buhl Building, the General Motors Technical Center, and the McNamara Terminal (Delta) at Detroit Metropolitan Airport. More recently, with the scaling back of Detroit’s car industry, SmithGroup has reformulated its client portfolio. Twenty years ago, about 80 percent of its commissions originated in Detroit; today Roehling estimates his automotive industry work has dwindled to about one-half. “So, in a sense, we are a very old firm, but a startup company,” he says.
Mad Men … and Women
When the economic upswing following the 2008 recession sparked an employee-poaching war in the Detroit-area advertising community, The Adcraft Club of Detroit took a cue from Godfather Don Corleone: It called a meeting of leaders from all of the agencies.
Instead of threatening to make their rivals sleep with the fishes, however, the agency “dons” asked for help attracting top talent.
“It’s not that we don’t have (talent) here,” says Melanie Davis, Adcraft’s executive director, “but we don’t have enough of it.” Talented advertising professionals had left Michigan for jobs in Chicago, Minneapolis, New York, and Los Angeles when the economy sank, leaving a void in Detroit that was hard to fill.
Adcraft President Bela Kogler says the biggest challenge is convincing out-of-state workers to move to Detroit.
In a bid to reverse the tide, Adcraft and its member agencies formed the Talent Team, whereby the club’s website is used to promote living, working, and playing in Detroit. The team is contemplating devising a road show that travels outstate and out-of-state to recruit advertising talent.
The effort is one example of the way Adcraft responds to its members’ changing needs, says Kogler, sales manager for Time Inc. The club has held career symposiums for college students, but recently added an executive learning series for more experienced members. It also introduced a social event, “Mad Men and Women of Detroit,” playing on the popularity of the Mad Men cable TV series. There’s also a billiards tournament, ski trips, and a bowling league that reportedly is the oldest in the U.S.
“A lot of what we do is recreational, it’s social. But at the end of the day, a lot of advertising is about relationships,” Kogler says.
Those relationships have been much of what advertising — if not all of business — has been about since Frank J. Campbell and Henry T. Ewald formed the Detroit Adcraft Club in 1905 with 30 charter male members. Women could not join until 1974. Membership grew to 3,500 in the 1990s, but dwindled to 1,500 during the recent recession, Davis says. But Kogler says she is working with the agencies to increase those numbers.
Davis, who was a member off and on for about 10 years and is the club’s first female executive director, says one of the first things she did when she took the reins in August 2010 was invest in and revise the club’s use of technology, moving from a server to cloud computing and creating plans for mobile apps.
She says the club owes its survival to a nimble staff that’s willing to change something if it’s not working. She also gives a nod to members who are passionate and committed to the organization’s success. Their attitude, even when everyone was dispirited during the depths of the recession, is: “This organization’s too important to us; it’s not going down,” Davis says.
Reinventing the Office
Walk into a Panera Bread at lunchtime, and you’ll be hard pressed to find a vacant seat. It’s not just the food, although Panera has legions of devoted diners. Many of the customers have a smart phone and laptop parked next to their soft drink and sandwich, and use Panera as their ad hoc office.
It’s a trend that hasn’t gone unnoticed by the people who make Steelcase furniture.
In fact, growing numbers of employees at Steelcase’s headquarters in Grand Rapids are, like many of Panera’s patrons, untethered to an assigned office or desk. Armed with a cell phone, laptop, or tablet, they work alone in lounges or in the company’s work café, or gather as a group in designated team meeting spaces.
Stav Kontis, a Steelcase brand communications manager who has been with the company for 24 years, had her own desk until four years ago. “In fact, I think having a desk would be a disadvantage with the way people work today,” she says. The lack of an assigned desk also promotes efficiency. Instead of waiting to schedule a meeting, she may run into a colleague and get her business done more quickly. “I often go to the work café just hoping to run into someone I need to speak to,” she says.
The company has not only changed where and how its employees do their jobs; it has grown dramatically since a dozen stockholders formed the Metal Office Furniture Co. in 1912. The name “Steelcase” existed as a brand before the company adopted it as its overall name in 1954. Steelcase has grown from 15 employees in Grand Rapids to 12,000 in the United States, Asia, Europe, and the Middle East.
And its annual sales have grown, too, from $76,000 in 1912 to $2.4 billion in 2011.
The firm’s range of products has varied over the years. The company first started to diversify from filing cabinets and safes in 1914, when it manufactured steel wastebaskets. Other more modern innovations include office furniture in colors, ergonomic seating, and modular workstations. Today, customers can purchase office furnishings and order moveable walls and floors to better access and change data lines, power outlets, and air-handling systems.
Steelcase has diversified its customer base, as well. In addition to servicing office users, the company furnishes classrooms and inpatient floors in hospitals.
One of Michigan’s most recognizable brands, Steelcase continues to stay in the forefront by recycling office furniture and packaging containers. It also has made a big push to service people who work from home, and constantly studies how graduates enter the workforce. Reflective of young recruits, Nancy Hickey, senior vice president and chief administrative officer, says the company will continue to adapt and change to meet consumer needs. “In many ways, my office is my smart phone,” she says. db