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what we know
Discovering needs and delivering solutions
We base our strategy on a core strength in problem-solving design and innovation. This great strength lies at the heart of Herman Miller. Ultimately, our customers want solutions that improve their performance or solve a problem. So we must go beyond simply selling hardware. Our customer engagement teams develop deep relationships and deliver value-adding knowledge in addition to innovative and quality products. By focusing on the whole solution, we help our customers discover their needs and select an answer that best fits their organizations. Understanding what whole solutions are possible isn't easy. It requires us to constantly explore the cultures and worlds our customers confront every day.
Herman Miller pursues research in many ways - through dedicated groups in West Michigan that follows trends, study ergonomics, explore new materials. Our designers also research new products in their studios, which are scattered around the world. Our services group turns much of our knowledge about work and workplaces into services for customers. We also publish a great deal, both in print and on-line (see hermanmiller.com for complete offering). By making what we know available to our customers, we help them understand what's possible. Our problem-solving designs depend on thorough and ongoing research, something you see reflected in steady design and research expenditures. Our products are ideas put in a form that helps customers.
One way we share what we know is through publications both online and in print. Jugglezine, our online magazine, our expanding series of Research Summaries, and SEE magazine present developed and developing knowledge to customers and the A&D community.
Great customer relationships begin and end with performance
Our Operations group has delivered to Herman Miller (through the widely-recognized Herman Miller Production System or HMPS) a new way of thinking about performance. Many people and groups have honed this system since 1996 when it began. While we have made great progress, this journey has no ending. We are now extending what we have learned through the HMPS to our suppliers and dealers. This expanded scope is full or promise for improvements in cost and customer satisfaction. The Herman Miller Production System focuses us on the relentless elimination of waste and bullet-proof reliability. This focus enables us to deliver cost-effective solutions on time, every time, with impeccable quality. We're truly pleased with the competent and dependable delivery system our Operations group is buildng with HMPS. It's a crucial part of implementing our strategy over the coming years.
Using our formula to serve new customers
Today, much of our energy and resources goes to solving problems in work environments; most of our sales are to customers in that market. We believe that our formula of product innovation, solution delivery, and operational performance will let us continue to increase the number of customers who choose Herman Miller to "create their great place to work." Yet we have always believed a truly great business has the ability to expand and redefine the customers that it can serve. We believe Herman Miller is a great business with a simple, but unique, formula that can extend to a much broader set of customers. We have already begun to extend this formula to other problem areas and to customers who need great places to heal, live, and learn. The potential of our formula to help all kinds of customers is large; experience in the adjacent markets of healing, living, and learning is teaching us a good deal.
These adjacent markets are not wholly new to Herman Miller. At its founding, Herman Miller was primarily focused on solving problems in living environments. We are blessed with a large number of iconic products for living environments that are treasured by multiple generations around the world. Our knowledge and expertise in healing environments stretch back to the late 1960s and 1970s, when, under the leadership of Robert Propst, we invented Co/Struc, a system of material handling carts and storage units for healing environments still solving problems today.
We intend to go beyond where we are today and push more deeply into solving problems in healing, living, and learning environments. The teams we have at work in these areas are full of competence and commitments. They are expanding our expertise, increasing the effectiveness and breadth of our products, and discovering new ways to help customers. They are busy applying the Herman Miller attitude of problem-solving to their customers' worlds. We have great expectations for them.
Work environments are a traditional strength for us. This year we introduced the Celle chair, a wonderful mid-priced, ergonomically sophisticated result of research and design. Such products truly help create great places to work.
Through a unique network of retailers, we have built an increasingly successful way of reaching consumers and the home market. Herman Miller for the Home continues to grow and re-introduce classic Herman Miller designs.
We are also researching and exploring the future of learning environments in the United States. The team is giving us a real basis of knowledge about this market and its future.
Our International group continues to do a superb job
We should also recognize International for yet another great year. They exemplify for us two of our values - Performance and Engagement. Sales have risen for International for three straight years, and their outlook is good. We thank them for their substantial contribution. We introduced at NEOCON 2004 a product - the Abak desking system - developed and successfully marketed in Europe.
We have had an international presence for many years. Today, we service customers in almost 80 countries around the world. While much of our international business is in large industrialized countries, we also service customers in many smaller places - even surprising places like Afghanistan. We are expanding our presence in the merging markets of India and China, since these countries are seeing a significant increase in knowledge workers as their economies continue to grow rapidly. In addition, many of our traditional customers, large multinational organizations, are investing in these markets, and we must be prepared to serve them around the world.
In spite of war and terrorism, work goes on, and we are determined to help our customers there as we are anywhere else in the world.
Two new adventures with great promise
Part of our strategy is to move into entirely new markets that can benefit from our base of knowledge in built environments. Begun a few years ago to pursue exactly such opportunities, the Herman Miller Creative Office recently launched one new product developed as part of this strategy and is preparing to launch another. In May, you may have seen the New York Times article discussing Babble, a sound technology that makes it possible to have private conversations without losing the benefits of open access to other people. We developed this in conjunction with Applied Minds, a small innovative group of thinkers in California. Babble is the first product of Sonare, a Herman Miller venture focused on technologies that help manage sound.
We are also excited about the potential of Motus, a new approach to design, build-out, and utilization of commercial space. We have installed Motus in 17,000-square foot retail space to provide this customer with a programmable environment that adapts over time quickly and easily. Motus will become part of an interior structure and utility delivery platform we hope will be applicable in multiple markets. Motus will help bulding owners, architects, designers, and organizations create and manage interior spaces.