Inside-Out Marketing

In an age when competitors can knock off products or services in an instant, smart companies are marketing their employees' know-how, Susan Greco reports. Plus: CEO Jack Stack on the amazing things that can happen when you bring your customers and employees together, in his first-person piece " The Ripple Effect"

Mogens Smed is out of luck. On a snowy october morning, the Danish-born chairman, president, and CEO of Smed International Inc. has arrived at the office at 9 to find his parking space taken. Many "Smed heads," as employees are called, have been on the job since 7:30. "I get no respect around here," says the CEO with a good-natured grumble. He quickly creates his own space, maneuvering his Lexus 4x4 up onto a median strip.

Smed's company, which started out making modular desks and storage units but in recent years has branched out into "creative working environments," has grown so quickly--sales jumped 56%, to $108 million (U.S.) in 1997--that such parking jams are common at its headquarters, in Calgary, Alberta. The factory next door has resorted to posting a sign: "No Smed parking. Violators will be towed."

Inside the building, Smed is fortunate to find his desk unoccupied. The place is wall-to-wall people. Some 250 office workers, many hired in the past 18 months, are down to 60 square feet or less apiece. That's at least twice as densely packed as most offices are. It's enough to remind Papa John's, a Smed customer, of its own origins: the pizza chain started in a broom closet. But the crowded quarters aren't the result of some crazed cost-cutting committee at work. Rather, they're a reflection of the reality of trying to accommodate hypergrowth.

In many ways, the offices also reflect the company's freewheeling culture. Mogens Smed, 49, works in an open bay of workstations he shares with his four executive vice-presidents. "What happened to my chair?" one of the four, chief financial officer Andrew Moor, asks this morning. Apparently, it's not an unusual question, though the company markets more than 200 styles of chairs. As Laura Larsen, the vice-president of marketing who now heads the seating sales division, puts it: "You have to figure out how you're going to be an asset here, even where you'll find a chair. When I first got here, I didn't have a desk and had to work out of a box."

Smed himself gave up his private office to make way for new employees. The two-office suite he used to share with one other executive has been remodeled into a maple-wood-finished enclave for 16 employees. And the reconfiguration was done in a weekend, speed being one of the early trademarks of this company, which guarantees customers delivery in four weeks.

As it happens, the executive-suite makeover is one of the highlights of a very revealing office tour the company conducts for current and potential customers. Smed calls it the working showroom. But this is no show. It's real life at a fast-growing company.

Spend a few minutes here, and it soon becomes clear that this is no ordinary company. And that's something Smed has seized on--and is actively marketing. Smed, which designs, manufactures, and sells office partitions and furniture systems that can be quickly installed and rearranged as needed, is living its products. As a result, its offices have become a working laboratory for product and service innovations. And in the past five years the office tour has become the major showcase for Smed products and, perhaps more important to potential customers, a sort of theater-in-the-round to show off the know-how and enthusiasm of Smed employees. Potential clients are guided through the company by workers eager to display both their technical knowledge and their understanding, through their own experience, of the flexible office arrangements so much in demand by their fast-growth-company clients.

Smed doesn't advertise; it doesn't do direct mail or telemarketing. And compared with its largest rivals, the likes of Steelcase Inc. and Herman Miller, it has no retail presence. Instead, the 15-year-old company has distinguished itself from the competition by making what it knows and uses itself--both its own products and those of others--entirely accessible to potential customers. The employee-guided tours, in short, have become the company's primary marketing tool.

"The place is very hectic, and for me the tour was very insightful," says Charles Devlin, president of $4-million R&D Transportation Services Inc., in Moorpark, Calif., who visited Smed with six other members of the Los Angeles chapter of his CEO-peer group, TEC/The Executive Committee. "I came back with a renewed sense of how important the right kind of culture is," says Devlin. "What they're selling is the Smed way. You're not buying a damn desk. Mogens wants you to see they're the real deal, if you will. It's not something they're just pitching; they're leading the same life as their customers."

Indeed, in its 15 years, Smed, now publicly traded, has experienced its share of downturns, cash-flow crunches, and fights with its own building contractors. And the people there know from upgrading their own space the havoc that network computing and fiber optics can wreak on an old building. (Smed uses technology for everything from its flexible manufacturing to analyzing the posture of a client sitting in a Smed chair.) "Most offices today are totally archaic in their form," Mogens Smed notes. The CEO figures he's done almost a complete reconfiguration of the office each year, making the company's "churn rate" close to 100%. More recently, when the CEO began planning the new corporate headquarters, scheduled to be ready in a month or so, the company took on a raft of technical and aesthetic challenges. More than 100 of its 1,400 employees in Calgary, from nearly every department, played a role in space planning--which has helped them better understand the challenges that many of their customers are facing.

It's no wonder visitors bring their cameras and take notes. Each month anywhere from 15 to as many as 150 come--chief financial officers, facilities managers, designers, architects, and company owners. Some 70% of Smed's customers come from the United States. Frito-Lay has come through, and DreamWorks SKG, too. Toyota has put Smed on its itinerary about a half dozen times over the last decade. And on their tour, executives from Coopers & Lybrand met with employees in the CAD department, product development, and customer service. The visitors come to kick the tires, and they come to try to poke holes in a small company--top-seeded Steelcase does $3 billion to Smed's $108 million--that sounds too good to be true. "These companies are tremendously demanding. They don't believe we can ship in 4 weeks; they're used to a furniture company saying 6 to 12 weeks," notes Gary Hinton, a longtime salesperson.