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REV: MARCH 9, 2012

TEACHING NOTE

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Cradle-to-Cradle Design at Herman Miller: Moving
Toward Environmental Sustainability

Case Synopsis

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Herman Miller, an office furniture supplier, decided to implement the Cradle-to-Cradle (C2C)
design protocol during the design of its mid-level office chair, Mirra. The C2C protocol was a set of
environmentally friendly product development guidelines created by architect William McDonough
and chemist Michael Braungart.1 The essence of this design protocol was to eliminate waste and
potentially harmful materials by designing the product so that, at the end of its useful life, the raw
materials could be fed back into either a technical or biological cycle and used for the same or other
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purposes. Therefore, materials remained in a closed-loop, eliminating the need for landfill and other
potentially harmful forms of disposal such as incineration.

The case describes the C2C protocol, the details of how Herman Miller implemented C2C during
the design of the Mirra chair, as well as the impact of the new protocol on their internal processes:
design, manufacturing, and supply chain management. The proximate decision point in the case is
whether the company should replace the polyvinyl chloride (PVC) material in the arm pads of the
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Mirra chair. PVC was a highly toxic material to manufacture and dispose of and thus violated the
C2C protocol. However, it was the standard material for arm pads and many other parts in the office
furniture industry as it was durable, scratch resistant, and inexpensive. To switch to thermoplastic
urethane (TPU), a more environmentally friendly material, for the Mirra Chair arm pad required last
minute changes to the arm pad production process with uncertain consequences. In addition, the
cost of TPU was higher than PVC. There was also uncertainty about the performance of the arm pad
made from TPU.
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At the same time, the decision raised questions that transcended cost and operational issues. With
the Mirra chair and its high-profile origins, the company was making a statement about the kinds of
products it thought “should” be produced, a notion only strengthened by eliminating PVC. This
would impact its future products and, more importantly (from a process perspective), its existing
products, which they continued to support and sell worldwide.
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1 McDonough, William and Michael Braungart (2002), Cradle-to-Cradle: Remaking the Way We Make Things, North Point Press.
________________________________________________________________________________________________________________

This note was prepared by Professor Deishin Lee for the sole purpose of aiding classroom instructors in the use of “Cradle-to-Cradle Design at
Herman Miller: Moving Toward Environmental Sustainability,” HBS No. 607-003. It provides analysis and questions that are intended to present
alternative approaches to deepening students’ comprehension of business issues and energizing classroom discussion. HBS cases are developed
solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or
ineffective management.

Copyright © 2008, 2010, 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-
800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may
not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

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Teaching Objectives
This case has been taught in courses that focus on Operations Strategy and Environmental
Management. The case objectives are:

1. Show how a firm can capture first-mover advantage from a strategic environmental initiative

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through operational excellence.

2. Understand what it takes to operationalize a strategic vision. In particular, the enormous

negotiation and technical efforts required to get suppliers to comply with the C2C protocol.

3. Explore the tension between capitalizing on first-mover advantage for an environmental

initiative and sharing the know-how to accelerate adoption of environmentally beneficial
practices by competitors.

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4. Introduce students to the notion of environmental sustainability and its implications, and
specifically, how the C2C protocol works to achieve this goal.

Materials and Assignment Questions

Materials
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Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability (HBS
Case 607-003)

Instructors may also chose to assign “The Biosphere Rules” as background reading to provide a
more comprehensive description of closed-loop design.
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Unruh, Gregory C. 2008. The Biosphere Rules. Harvard Business Review. February 2008; pp. 1-8.

Assignment Questions

1. Should Herman Miller should use PVC or TPU in the Mirra Chair arm pad?

2. What is your assessment of how Herman Miller implemented the C2C protocol?

3. Why did Herman Miller undertake this strategic environmental initiative?

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Analysis
There are two levels of analysis in the case: the analysis pertaining directly to the Mirra Chair PVC
decision, and the analysis of the implications for taking an environmental leadership role to eliminate
or reduce the use of PVC and other harmful materials in the furniture industry.

The PVC decision

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Confining the analysis to the PVC decision for the Mirra chair raises mainly tactical issues:

Cost: The increase in the cost of the chair can be calculated from the information in the case and
some ballpark assumptions. We know from the case that TPU increased the cost of the arm pad by
30%, the arm pad contributed up to 10% of the cost of the chair, the retail price of the chair was $750,
and in 2002, the gross margin and operating income were 30% and 0.4%, respectively. This was a

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 Teaching Note—Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability 609-013

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particularly bad year for Herman Miller as the effects of the internet bubble bursting hit them.
Assuming the retailer had 33% gross margin, the implied revenue per chair for Herman Miller was
$500, which in turn implied a gross profit of $500 x 30% = $150, or equivalently, a COGS of $350. If
the arm pad cost was 10% of the full cost of the chair, then a 30% increase implied an increase of $10.5
per chair. If the arm pad cost was 10% of the material cost, then assuming the material cost was 60%
of the total cost of the chair, a 30% increase implied an increase of $6.3 per chair.

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The increase of $6-10 per chair could be perceived as trivial compared to the $750 retail price of
the chair, or huge compared to Herman Miller’s $2 (0.4%) operating income per chair. Even in a very
good year, say 2001, Herman Miller’s operating income per chair was $50 (10%). The increase in cost
from TPU would still have been quite significant relative to the operating income (possibly making
the chair unprofitable). By comparing the cost increase to the retail price, the implicit suggestion is
that the cost increase could easily be compensated by a barely noticeable increase in retail price.

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However, there are two potential pitfalls in this reasoning. First, at the late stage of the PVC decision,
it is likely that the retail price of the chair had already been set and possibly even promoted and a
change, no matter how slight, would reflect badly on the launch. Second, simply passing on cost
increases to the customer is a pricing strategy that works in exceptional circumstances (e.g., cost-plus
military contracts). What is much more likely is that Herman Miller would absorb a significant, if not
all the cost increase imposed by TPU.

Quality: Although the initial testing indicated that the characteristics of TPU were at least as good
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as PVC, the arm pad vendor did not have much experience using the material and it was unclear
what the production quality of the TPU arm pad was going to be. In the best case scenario, the
production quality would be fine and the vendor would quickly learn to work with TPU. In the
worst case scenario, the vendor would not be able to produce quality TPU parts. The quality of the
arm pad would be substandard, adversely affecting sales of the Mirra chair and the reputation of
Herman Miller. Another possible outcome might be that there would be many more defects with
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TPU, and that would drive up the cost of the arm pad. However, parts could be produced with
quality “inspected in.”

Schedule: New tooling or other productions issues with the TPU arm pad could delay the launch
date for the Mirra Chair. The late change to TPU could derail the product launch at Neocon, the
annual trade fair for office furniture.

Brand: If Herman Miller was successful in creating a PVC-free Mirra chair of high quality in time
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to launch at Neocon, they could use the C2C protocol and in particular, the lack of PVC, in the
marketing of the Mirra Chair. However, if TPU does not perform well, Herman Miller risks eroding
its quality image.

Internal credibility: Within the company, making the difficult decision to eliminate PVC would
signal the company’s commitment to the C2C protocol. In fact, staying with PVC may lower morale.

The analysis for the PVC decision generally pits risk and cost aversion against “doing the right
thing”. To inform this analysis, we also need to consider the PVC decision in the context of how the
C2C design protocol fits into Herman Miller’s strategy, and how this decision impacts other current
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and future products.

Operationalizing Herman Miller’s Strategic Environmental Initiative

Herman Miller had a very strong and distinctive culture. It had always valued creative and
innovative design and many of its products became museum pieces, however, its appreciation for

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beauty and creativity extended beyond its products to the community at large. In this sense, Herman
Miller’s commitment to the environment was a natural extension of the responsibility it felt to
contribute to a better world. It stated in its Corporate Values statement, “We contribute to a better
world by pursuing sustainability and environmental wisdom. Environmental advocacy is part of our
heritage and a responsibility we gladly bear for future generations.” To operationalize its
commitment to the environment, Herman Miller chose to implement the C2C design protocol.

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Alignment: The C2C design protocol was aligned with Herman Miller’s strong design focus and
environmentally progressive culture. Because of its strong culture, Herman Miller tended to attract
individuals who held the same values. Those who didn’t fit in quickly left the company (see
Schramm’s comment “There is a very strong culture at Herman Miller...”). The homogeneity in its
workforce was a key factor in successfully implementing the C2C protocol. Since everyone was on
board to begin with, there was very little internal resistance. Reservations about C2C were never

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about whether it was the right thing to do, but rather whether it was feasible for the business.

Implementation: See TN Exhibit 1 for a timeline of Herman Miller’s C2C implementation under
its Design for Environment (DfE) initiative.

 Organization. A big organizational change was the creation of the DfE team of Gabe Wing
(chemist) and Scott Charon (supply chain manager) under Paul Murray, Director of
Environmental Health and Safety, and also the creation of the DfE steering committee,
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consisting of senior level managers from every function of the company. Although Charon
and Wing spearheaded the implementation of DfE, their activities and any roadblocks were
reported to the steering committee, who used resources at their disposal to pave the way for
C2C implementation. The DfE score for every product was reported at the CEO level and
achieving a threshold score was a requirement for shipping a new product.
 Design. Every designer was trained for several hours on the DfE guidelines. The product
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development process was changed so that the DfE team could filter the output at each stage
through the C2C protocol and give feedback to the originating organization. See TN Exhibit
3 for a schematic of how DfE interacted with the development process.
 Supply Chain. A key criterion for the success of the C2C implementation was the cooperation
of its suppliers. It took enormous effort on the part of the DfE team to work with each
supplier. Suppliers were understandably hesitant to share their proprietary information (see
Schramm’s quote “DfE creates a lot of anxiety with our suppliers...”). However, Herman
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Miller was able to “persuade” most of them because it was one of the big players in the
industry (see Case Exhibit 3) - not quite the 800-lb gorilla, but a pretty decently sized 600-lb
gorilla. (Post-case update: Eventually, most suppliers came on board. Only two companies
declined to participate and they were replaced by other suppliers.) Because of the level of
detail required for the DfE materials assessment, Herman Miller collected very reliable data
on the raw materials from suppliers. The DfE database also served as a database for qualified
suppliers who complied and were familiar with the C2C protocol.
However, suppliers took a big hit with C2C implementation. There was a basic agency
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problem for suppliers to comply with the C2C protocol. If they invested in developing new
materials and process technology, they could be subject to hold-up2. However, Herman

2 Gibbons (2005) describes hold-up in capacity/capability investment situations, and Lee and Van den Steen (2010) study the
agency problem within a firm when one party bears the risk of innovation and another party shares in the rewards (Gibbons,
Robert (2005), “Incentives Between Firms (and Within)”, Management Science, 51(1), pp. 2-17, and Lee, Deishin and Eric Van
den Steen (2010), “Managing Know-How”, Management Science, 56(2), pp. 270-285).

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Miller was in earnest when it said it would work with suppliers to find a solution (see Drew
Schramm’s quote “If we hit a C2C hurdle, we don’t just give up...”). In order to alleviate the
hold-up problem, the firm spent its own resources to help suppliers through the transition.
Through the process, a stronger, deeper, and mutually beneficial relationship could develop.
 Mechanics. The actual DfE assessment of a module or product is described on in the “Design

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process” section and in Case Exhibits 5 and 6. The contribution of each part to the score was
proportional to the weight of the part. Weight was a logical measure to use (vs. part number,
for example) because it generally reflected the potential waste that was generated by the part.
The assessment was done by the DfE team (primarily Gabe Wing) using McDonough
Braungart Design Chemistry’s (MBDC) materials screening process, which Herman Miller
paid for, i.e., every time Herman Miller assessed a material, they paid MBDC to do their
material screening. This is not highlighted in the case because we did not want to make the

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MBDC process a central component, but it should be noted as a C2C expense that was
continually incurred.
 Cost. The “hard” costs for implementing C2C were $100K for IT engineering for the
materials database, $300K for material screening by MBDC (initially, but on-going charge as
more materials were screened), $350K/year for salaries and benefits for Charon and Wing.
Harder to capture “soft” costs included the disruption of their established design process,
straining of supplier relationships, and possible delays in getting parts because either
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suppliers needed to find new vendors, develop substitute material, or learn to work with a
new material, or Herman Miller needed to find new suppliers that could comply with C2C.
Process Changes: The C2C protocol affected the processes of every organization in the firm.

 Design. C2C imposed constraints on designers in terms of material selection and disassembly
requirements. Limiting feasible materials could actually save designers time (see Doug Van
Riet’s comment), but they may spend more time working with new materials to optimize
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part performance. Although some product innovations were created (e.g., the new design for
the Y-spine, scratch resistant TPU), not all changes would lead to improved quality or cost
reductions.

 Manufacturing. Because C2C required that the product be easily disassembled, it also
affected the way it was assembled. It could potentially be very easy to assemble (see
Henrietta Carter’s quote “like a tinkertoy”), or it could potentially be more difficult, e.g.,
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requiring screws instead of snaps. However, having the easy to disassemble criterion in the
design protocol highlighted the assembly and disassembly issues during the design process,
forcing designers to make conscious decisions along those dimensions. DfE was consistent
with the Herman Miller Production System’s philosophy of reducing waste (based on the
Toyota Production System). Examples of reducing packaging are given in the
“Manufacturing” section of the case.

 Supply Chain Management. On the one hand, the rules of engagement with suppliers became
clearer with the implementation of the C2C protocol. On the other hand, complying with the
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rules was more difficult and created friction. It was more difficult because there was
significant embedded knowledge in the supply chain on how to work with standard
materials such as PVC. Not only did the embedded knowledge apply to processes within a
firm, but it also facilitated the interface between firms, i.e., standard materials facilitated
contract negotiation and enforcement.

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 Sales and Marketing. There were already signs that the market was looking towards more
environmentally friendly products (e.g., customers asking for PVC-free products). The C2C
design could be used as a selling feature for the Mirra chair and PR vehicle for Herman
Miller’s image as a responsible corporate citizen. Herman Miller estimated that about a
dozen customers had up to 25% of their purchasing decisions based on environmental
criteria (e.g., EPA, environmental consulting firms). However, over-marketing the green

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image could backfire, especially for PVC, a material that is used pervasively in Herman
Miller’s products.

The reason why the Mirra Chair PVC decision was so difficult is because it could potentially set
into motion the application of the C2C design protocol for all future and existing products – a
potentially monumental task involving resources from every organization (described above). By
eliminating PVC from the Mirra Chair, Herman Miller would implicitly be acknowledging that PVC

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was a harmful substance and that there was at least one viable substitute. There would be increased
pressure to eliminate PVC from all their products. For future products, this would be challenging,
but the company could plan for the change by following its DfE process. (Note that just because TPU
was a viable substitute for the arm pads, it might not be appropriate for other PVC applications.)
What would be more problematic is eliminating PVC from its existing product lines. Being a high-
quality furniture manufacturer, Herman Miller products lasted for a long time. In fact, the company
continued to support every product it had ever produced. Replacing PVC in each of those products
would require design, development, supply chain, and support engineering resources to identify,
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test, source, and support replacement PVC-free parts.

Capturing the Value

The glaring weakness of the C2C protocol was that it did not provide or suggest a mechanism for
closing the loop. Products made of 100% recyclable material that were easily disassembled could and
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probably would still end up in landfill. There is a general “chicken and egg” dilemma of what
should come first, infrastructure for recycling or something to recycle 3. However, before even getting
to the broader question of how the potential environmental benefits can be realized, there is the
specific question of what Herman Miller gains by implementing the C2C protocol? Not only did it
not have a way of capturing the material value from its environmental designs at the time, it had no
plans to pursue closing the loop. The firm must have believed that there was some other way to
capture value from its strategic initiative. Scrutinizing its design process through an environmental
lens may allow it to identify areas of improvement, but those serendipitous opportunities would not
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justify a strategic initiative. The firm had a sincere desire to be environmentally responsible, which
also surely factored into its decision making. However, that too would be a weak basis for launching
a strategic initiative. The value that Herman Miller can capture from this environmental initiative was
best summarized by Mark Schurman’s quote from the case: “We absolutely believe that more and
tighter environmental regulations are the way the world is going. We’re already seeing it in Europe.
DfE is going to help us stay ahead of the curve, hopefully setting the industry standard.”

First-Mover Advantage: By implementing the C2C protocol, Herman Miller was subjecting itself
to a stricter standard than its competitors, potentially at a cost disadvantage. The “value” created by
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3 Although the argument appears to be symmetric, it seems unlikely that recycling infrastructure will pop up spontaneously
without any material to recycle. There is the practical matter of deciding what kind of equipment and
recycling/remanufacturing processes are required without knowing what material is going to be processed. It seems more
plausible for the initiative to come from the forward supply chain side.

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 Teaching Note—Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability 609-013

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the environmental initiative would actually be captured by society4. By moving first, Herman Miller
was betting that in the future, its competitors would be forced to adhere to this standard, either
through legislation or public pressure5. In fact, by establishing itself as the environmental standard
bearer, the firm hoped to influence legislation or public opinion in a direction that leveraged the
operational capabilities it had developed, thereby creating a competitive advantage. Herman Miller’s
advantage does not derive from the fact that they found an environmentally friendly alternative

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material to PVC, but rather, they developed a process for incorporating environmental standards into
its design. Therefore, they positioned themselves to respond to a range of potential environmental
legislative requirements.

Profit vs. Social Welfare: The environmental dimension adds a layer of complexity to this first-
mover analysis. The faster all firms develop operational capabilities to achieve higher environmental
standards, the better it is for the environment. Accelerating the adoption of its competitors would be

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directly aligned with Herman Miller’s corporate mission that states, “Environmental advocacy is part
of our heritage and a responsibility we gladly bear for future generations.” Clearly, there is a tension
between leveraging its operational capabilities for competitive advantage and sharing its know-how
to benefit the environment. This case illustrates the broader tradeoff between profit and social welfare
maximization. However, what is unique here is that this tradeoff is naturally mitigated by the nature
operational know-how. Herman Miller could choose to share its know-how, but since the crux of its
advantage is process capability, it would be difficult to transfer this knowledge even under the best of
intentions6. Therefore, the firm would likely still stay a generation ahead of its competitors in
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material science, process technology, and environmental design.

PVC vs. TPU: In light of Herman Miller’s environmental strategy, a good case could be made for
pressing forward with TPU for the Mirra Chair arm pad. The firm would send a clear signal
internally and externally that it was serious about the C2C protocol. Moreover, it could leverage the
Neocon ship deadline to galvanize internal and supplier resources to make TPU work in a timely
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manner (and not risk losing the momentum if the task were relegated to a maintenance project for the
future).

Case Update
 Herman Miller decided to proceed with TPU for the Mirra Chair arm pad. It modified the
production tool originally designed for the PVC arm pad and although it worked, the tool was
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difficult to work with in production. As volumes increased for the Mirra Chair, a second tool
was designed and created specifically for TPU. Both tools are currently in operation.

 Herman Miller’s popular Aeron Chair was redesigned to eliminate all PVC parts.

4 Wernerfelt and Karnani (1987) study a first-mover strategy under uncertainty, however, in their setting, the firm directly
benefits from the strategy initiative (Wernerfelt, Berger and Aneel Karnani (1987), “Competitive Strategy under Uncertainty”,
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Strategic Management Journal, 8(2), pp.187-194).

5 This is contrary to typical first-mover advantage under network effects where the firm captures value by offering a proprietary
standard, e.g., Lee, Deishin and Haim Mendelson (2007), “Adoption of Information Technologies under Network Effects”,
Information Systems Research, 18(4), pp. 395-413, and Lee, Deishin and Haim Mendelson (2008), “Divide and Conquer:
Competing with Free Technology under Network Effects”, Production and Operations Management, 17(1), pp. 12-28.
6 Hayes, Robert H., Gary P. Pisano, and David M. Upton (1996), Strategic Operations: Competing Through Capabilities, The Free
Press.

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 Currently, 50% of product sales are from DfE approved products (adhering to the C2C design
protocol).

 The CEO, Brian Walker, committed to the goal of having 100% of product sales DfE approved by
2020.

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Teaching Plan
The following teaching plan is designed for an 80 minute class. A suggested board plan is shown
in TN Exhibit 4.

1) Mirra Chair PVC vs. TPU Decision (15 min)

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Should Herman Miller stay with PVC or switch to TPU in the Mirra Chair arm pad? (15 minutes)

PVC
 TPU too expensive: ~$6/chair increase in
cost (from cost analysis above).
 Tooling requirements for TPU could delay
the launch. Can expedite the fabrication of
a new tool (if it’s necessary), but still need
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time to calibrate and optimize the
parameters of a new or modified tool for
TPU.
 PVC is the industry standard. Other
competitors are not doing it so why should
Herman Miller?
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TPU
 TPU cost is trivial: ~$6/chair in a $750
chair is insignificant (see cost analysis
above).
 Consistent with their goal of zero footprint,
which is consistent with the values and
culture of the company.
 Use PR to their advantage by contrasting
with competitors.
 Use PR to pressure competitors to also
replace PVC, thereby leveling the playing
field.

 No infrastructure for recycling.  They will have to do it sooner or later, so

 Sets a precedent for other products. the sooner they do it, the sooner they can
find a viable alternative.

Students, but not necessarily executives, may naturally gravitate to using TPU because of the
emphasis of “green” in the popular press and an assumption that “doing the right thing” means
“going green”. To balance this tendency, the instructor can ask the following question to bring out
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the ramifications of the decision.

Who is going to make this decision?

The decision went all the way up to the CEO. It was made just when the internet bubble burst
and operating earnings were only 0.4%. Every increase in cost was going to be heavily scrutinized.
Also, $6 increase in cost when operating income was only $2 would have made the chair unprofitable
(see cost analysis above). It is unlikely earnings would stay that low, but even compared to operating
earnings in a good year (in 2001, the operating income per chair would have been $10), the $6
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increase was quite significant.

Moreover, Herman Miller was also worried about the implications for its future products AND
existing products. By replacing PVC in the Mirra product, they risked starting the domino effect. 50%
of furniture products contain some PVC (Case page 1). If the firm made a big deal out of caring for
the environment and showcased how environmentally friendly the Mirra chair was, it needed to be

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 Teaching Note—Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability 609-013

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prepared to address the rest of its products. It is useful to bring up here that Herman Miller has never
discontinued any product in its entire history. Its furniture lasts forever and the firm has supported
all products as long as customers have continued to use them. The Mirra Chair PVC decision was a
strategic decision that fit into a broader strategic initiative: C2C.

2) Operationalizing C2C (20 min)

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The PVC decision is part of a broader strategic initiative undertaken by HM. What is the notion
behind C2C? Why does Herman Miller think it is a “godsend to business”?

It is useful to highlight the conceptual shift from conservation espoused by conventional

environmental wisdom to the “waste equals food” concept behind C2C (see TN Exhibit 2).

What is your assessment of how Herman Miller translated the C2C concept into practice?

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The purpose of this discussion is to outline the key elements of Herman Miller’s implementation
of C2C to emphasize that the process impacts every part of the organization (see implementation
analysis above). The effort required was significant.

What do Herman Miller’s employees think of C2C?

C2C fit with Herman Miller’s culture along two important dimensions: appreciation for design
and stewardship for the environment. The firm’s strong culture attracted talented people with similar
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values. The homogeneous culture made it easy to implement C2C because employees were self-
selected and therefore predisposed to care about the environment. Herman Miller tapped into an
issue that resonated with the existing mentality of the employees, allowing it to translate a mission
statement into action. Following are the three levels of operationalizing its mission statement:

Mission statement “We contribute to a better world by pursuing sustainability and

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environmental wisdom. Environmental advocacy is a part of our

heritage and a responsibility we gladly bear for future generations.”
Strategic initiative Cradle-to-Cradle design protocol
Specific process changes Training, design process changes, DfE scorecard

How does the C2C protocol change the way Herman Miller develops products?
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This discussion should reveal that the C2C protocol affected the entire product development
process. Moreover, there was a learning curve to working with the C2C protocol. It is helpful to put
up the diagram from TN Exhibit 3. A key point to emphasize is what it took from the perspective of
supply chain management and use that as a segue into the next discussion.

3) Suppliers (20 min)

Why did suppliers need to be “cajoled” into complying with C2C?

There was understandably resistance from the suppliers. Not only did they need to share
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proprietary information with Herman Miller, but after evaluating this information, Herman Miller
might have required that they change their product or process, or possibly even terminated their
relationship.

What does it take for the arm pad supplier to switch from PVC?

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The purpose of this discussion is to highlight the effort (find alternatives, test alternatives, design
and fabricate tooling, develop manufacturing processes) and risk (hold-up) that the supplier bore as a
result of the C2C protocol. Herman Miller mitigated the hold-up problem by investing its own
resources to help suppliers identify and develop new materials. However, it was still a significant
effort to find and implement an alternative.

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This effort would be exponentially magnified if PVC had to be eliminated from all products and
even more if the C2C design protocol was applied to all products. There was significant embedded
knowledge in the supply chain on how to work with standard materials such as PVC. Not only did
the embedded knowledge help processes within a firm, but it also facilitated the interface between
firms, i.e., standard materials facilitated contract negotiation and enforcement.

Ask students to imagine what it would take for Herman Miller to get rid of PVC from all its
products. It’s not even clear that TPU would be a feasible substitute for every application of PVC.

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This could be a HUGE undertaking for HM.

4) Capturing Value (20 min)

We’ve talked a lot about what it takes to operationalize this strategy. What does Herman Miller
gain from this strategic environmental initiative?

Students may list the following intangibles:

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 Reputation/brand (“green” company)
 Employee recruitment and retention
 Anticipate impending legislation (first-mover advantage)

It is important to emphasize the first-mover advantage point. Herman Miller developed a process for
incorporating a range of future legislative requirements. Based on the previous discussion of what it
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took to operationalize this strategy, it should be clear that this process could be a source of
competitive advantage. Once this point has been made, the following question can be asked to
stimulate an ethical debate.

Should Herman Miller help its competitors implement C2C?

If Herman Miller has developed a good process for environmental design, and it genuinely cared
about the environment, then it should share its knowledge with its competitors. (An interesting point
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to bring up here is that McDonough and Braungart, the originators of the C2C protocol, now charge a
considerable fee for their materials assessment service.) What is unique in this situation is that the
source of Herman Miller’s competitive advantage is their process. Process capability is very difficult
to transfer, even under the best of intentions. Therefore, Herman Miller could act with a clean
conscience and be helpful to competitors, but still be relatively assured that it would be a generation
ahead of its competitors in terms of process capability.

The class can end with the following open discussion:

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Does C2C help the environment?

Currently, C2C has little impact on the environment because there is no systematic way to close
the loop. We have a chicken and the egg problem: need infrastructure to recycle, but won’t build
infrastructure until there is recyclable material. To “close these loops”, regulatory mechanisms are
typically required. This is characteristic of many environmental problems: they cannot be solved at

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 Teaching Note—Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability 609-013

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the firm level. Industry coordination and regulation of externalities need to be facilitated above the
individual firm level. Unfortunately, the process of setting regulation is messy and prolonged (e.g.,
healthcare). Part of a firm’s strategy can be to be proactive about its own process as a way to
influence policy to its own advantage (as in the Herman Miller case).

5) Wrap (5 minutes)

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 This case helps us understand what it takes to operationalize a strategic vision. In particular,
because of the nature of the environmental initiative, it took enormous negotiation and
technical efforts to get suppliers to comply with the C2C protocol.
 The value from the strategic initiative is captured through first-mover advantage by
leveraging process capability.
 For better or worse, process capability as the source of competitive advantage mitigates the

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ethical tradeoff between helping competitors to be environmentally responsible, and
leveraging the competitive advantage.
 There are many things that firms can do reduce their environmental impact, but they have to
be part of a larger solution that incorporates coordination across industries and society.
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No
Do

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 609-013 Teaching Note—Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability

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TN Exhibit 1 C2C Implementation Timeline

1997: Herman Miller initiated a project with the goal to create a sustainable product
development process. William McDonough proposed that Herman Miller use the C2C
protocol to design its products.

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2000: At the conclusion of the project, the steering committee recommended that dedicated
resources be applied to the implementation of C2C.

2001: Herman Miller officially adopted C2C as its design protocol.

Jan 2001: DfE team under Paul Murray, Director of Environmental Health and Safety, was
formed. Scott Charon (supply chain manager) and Gabe Wing (chemist) were hired as
full-time DfE team members. Charon and Wing started negotiations with suppliers for

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material chemical composition. They talked to over 200 suppliers in the first 6 months.

Jun 2001: Charon and Wing trained over 300 Herman Miller employees from engineering, supply
chain management, and manufacturing on C2C, and their external design consultants.
Each employee received approximately 3 hours of training.

Oct 2001: DfE kickoff meeting for the Mirra chair.

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Aug 2002: The DfE Steering committee met to discuss whether to use PVC in the Mirra arm pad
assembly.

Jun 2003: Anticipated launch of the Mirra chair.

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No
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TN Exhibit 2 The Cradle-to-Cradle Design Protocol

The crux of the Cradle-to-Cradle design protocol was the notion of closed loops for materials (which
implied “waste equals food”). This was the conceptual breakthrough by McDonough and Braungart.
By ensuring that the waste from one process was the food for another, there was no need for
conservation – more was better. This was why Mark Schurman stated that C2C was “a godsend to

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business”. Instead of imposing constraints, the C2C protocol liberated businesses by encouraging
more consumption, thereby making it easier to grow.

Conventional environmental wisdom (cradle-to-grave): conserve, use less

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raw end-of-life
material disposal

Cradle-to-Cradle: use as much as needed, just use the right material

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biological waste = food technical
loop loop
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No
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TN Exhibit 3 How DfE Interacts with the Development Process

Explore Develop Launch Maintain

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final DfE
DfE product scorecard
module DfE
kick-off “double check”
prototypes scorecard
replacement DfE
parts scorecard

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DfE team

Suppliers
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Explore: The DfE team holds a kickoff meeting to explain C2C and how the DfE assessment process
works.
Develop: As development teams iterate through prototypes, the DfE team assesses each version for
material chemistry, disassembly, and recyclability and recycled content. The bulk of DfE work is
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done in this phase.

Launch: The DfE team does a final assessment on the product as a whole. This is mainly a double
check as problems should have been caught in the development phase.
Maintain: Any replacement parts that are sourced for cost reduction or performance improvement
reasons are assessed by the DfE team.
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Suppliers: The DfE team constantly works with suppliers to assess their material, and develop new
materials and processes.
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 Teaching Note—Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability 609-013

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TN Exhibit 4 Board Plan

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3) Suppliers 1) PVC vs. TPU 2) Operationalizing C2C

a) Implementation

4) Capturing value b) Process changes

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op
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No
Do

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Permissions@hbsp.harvard.edu or 617.783.7860.