Highsmith Inc.

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Highsmith Inc.

W5527 State Road 106
Fort Atkinson, Wisconsin 53538
U.S.A.
Telephone: (920) 563-9571
Toll Free: (800) 558-2110
Fax: (920) 563-7393
Web site: http://www.highsmith.com

Private Company
Incorporated: 1956
Employees: 220
Sales: $60 million (2002 est.)
NAIC: 454113 Mail-Order Houses; 423990 Other Miscellaneous Durable Goods Merchant Wholesalers

Situated on a rural campus in Fort Atkinson, Wisconsin, Highsmith Inc. is a leading marketer of products for schools, libraries (public, school, and specialty), and businesses. The company's base of more than 350,000 customers spans the globe and includes clients in Africa, Canada, England, Guam, Puerto Rico, the United States, and the Virgin Islands.

Highsmith's offerings are expansive. Its 12 specialty catalogs include more than 25,000 items ranging from furnishings and supplies for classrooms, offices, and libraries to audiovisual equipment and computer software. Highsmith has been recognized nationally for its commitment to employee wellness and promotion of librarianship.

According to the company, in addition to Highsmith Library Supplies and Equipment and Highsmith Contract Sales Group, other core business initiatives include UpstartBooks (library reference and instructional materials), the Upstart line of reading-promotion materials, MindSparks Cartoons and Visuals (history and social studies curriculum materials), and Highsmith Corruboard/Dealer Sales (corrugated display, organizational, and storage products).

Origins

Highsmith is the brainchild of Hugh Highsmith, who grew up in the small town of Johnson, Indiana. As a boy, Highsmith spent a great deal of time reading books at the library in nearby Owensville, where he attended school. Along with a passion for reading, Highsmith gained respect and admiration for libraries and librarians.

At the age of 12, Highsmith joined his brother working on the family farm, where he learned fundamental business and financial skills by selling melons. It was around this time that Highsmith became a student of classified magazine ads and a "catalog connoisseur," according to the company. In the September 1990 issue of the Highsmith Grapevine, Hugh High-smith recalled: "I learned respect and appreciation for libraries, a customer's view of mail order and that I preferred working for myself—all of which later influenced my life and the development of this company."

Highsmith eventually attended Indiana University in Bloomington, graduating with a business degree in 1936. After college his career took a varied and mostly unfulfilling path, including stints as an industrial claims adjuster in Chicago; a J.I. Case dealer in Waukesha, Wisconsin; and a department head at the Montgomery Ward store in Woodstock, Illinois. Highsmith then joined the Western Advertising Agency in Racine, Wisconsin, where he ultimately became an account executive.

After leaving Western Advertising, Highsmith pursued his entrepreneurial calling and in 1946 became president of Nasco—a company he bought in partnership. Highsmith sold his interest in the business ten years later to concentrate on a magazine called Farmer's Digest, which he had purchased in 1954. He also developed and produced a shelf file for National Geographic magazines that his company would keep selling for many years to come.

Incorporation and Steady Expansion: 1956–86

Highsmith incorporated his enterprise on September 19, 1956, under the name United Book Publishers Company. However, when a planned acquisition did not transpire, the name Highsmith Company was adopted three months later. Operations initially took place from a small, three-room suite at 81 North Main Street in Fort Atkinson.

Hugh Highsmith eventually relocated his new company to a 3,000-square-foot farmhouse located on Curtis Mill Road. As Kathy Brady wrote in the September 1990 Highsmith Grapevine article: "Besides working the farm, the company continued to publish Farmer's Digest, [sell] magazine files and produce agricultural items. At one time, the company produced 270,000 calf halters for one customer!"

As Brady explains, Highsmith later "had the opportunity to purchase the small book company previously considered from George Knutson, a modest man who had built a business selling overruns of children's books to schools. These books were sold to schools, before the advent of the school library, for students to check out from their teachers. The books were featured in early Highsmith library catalogs, along with book-related products."

Growth soon rendered the Curtis Mill Road location inadequate, prompting Hugh Highsmith to move the company to a newly constructed, 12,000-square-foot facility in 1966. Located east of Fort Atkinson on Highway 106, the new site was situated in a scenic rural area with a spring-fed pond. At this time, the company employed 20 workers, including 13 women.

As Highsmith transitioned into the 1970s, the company continued to grow at an explosive pace. In 1969, Hugh Highsmith sold Farmer's Digest and focused solely on marketing supplies. From 1969 to 1973, annual sales—which came exclusively from the company's catalog offerings—grew at a rate of approximately 30 percent. In this short timeframe, Highsmith's employee ranks tripled to 60 workers.

According to the August 8, 1973 issue of the Daily Jefferson County Union, during the early 1970s some 85 percent of Highsmith's revenues came from the sale of library equipment and supplies. The rest was attributable to magazine files, as well as agricultural supplies sold mainly to mail order houses, Sears and Roebuck, and the like. Highsmith's catalog had grown to include roughly 7,500 items.

In addition to achieving remarkable growth, Highsmith also was progressive in the area of shipping and logistics. In order to reduce shipping and storage costs, the company shipped certain items directly from manufacturer to customer. In addition, it leveraged information technology to its advantage long before many companies were doing so. The same Daily Jefferson County Union article explained: "Invoicing is processed by a computer, which acts as a memory bank for availability of items at a given moment. When an item is low in stock, a printout by the computer at the end of each day makes note of that article."

As the company experienced rapid growth, additional physical expansion was needed. Highsmith nearly doubled the size of its new building after only three years, and further expansion occurred in 1972. By 1973, its headquarters had grown from 12,000 square feet to 30,000 square feet.

As his company prospered, Hugh Highsmith, who had once served as president of his community's local historical society, took the time to share it with others throughout the world. In a report titled the History of Fort Atkinson Industry, Bill Starke wrote that in 1973 Highsmith "announced plans to contribute 'seed money' to start free libraries in underdeveloped countries. He was state director of the 'Partners of the Americas' program, had traveled widely in Nicaragua and saw the need for something for their children to read and took action to remedy the problem."

In 1976, Hugh Highsmith's son, Duncan, joined the company as director, design/research. Duncan Highsmith graduated from Antioch College in 1969 and then attended the University of Wisconsin-Milwaukee, where he pursued graduate studies in architecture and urban planning. In the January 1999 issue of Inc., Leigh Buchanan described Duncan as "a fine-arts-studentturned-radical-press-publisher-turned-Japanese-sculptor's-apprentice-turned-architecture-student who vowed never to work for his father's company."

By the early 1980s, Duncan Highsmith had been promoted to executive vice-president and chief operating officer of his family's company, which had sales of approximately $16 million. By 1983, Highsmith offered 20,000 items to its roughly 200,000 customers, 70 percent of which were libraries. The remainder of Highsmith's customers included offices, museums, banks, and individuals. In addition to domestic sales, Highsmith also conducted business with customers in Africa, England, Canada, the Carolinas, Guam, the Marianas, Puerto Rico, and the Virgin Islands.

One innovative development took place in 1984, when the company joined forces with Freeport, Illinois-based Microcomputer Libraries to create what the May 1, 1984 issue of Library Journal described as "a non-profit 'national clearinghouse for library management applications of general purpose microcomputer software.' " The clearinghouse involved libraries copying and distributing shareware.

Organizational Evolution: 1987 and Beyond

In 1987, Duncan Highsmith succeeded his father as president and CEO. Sales reached $35 million that year. By August 1988, the company received 3,000 to 5,000 sales calls each week, along with 10,000 pieces of mail and 11,000 customer service inquiries. As CEO, Duncan Highsmith changed the organization's structure by implementing self-directed work teams and enabling workers to have more control over decisions related to their environment and work tasks. In addition, he ensured they had access to outside sources of information, including journal articles, to support their decision-making. In the May 14, 1997 issue of the Capital Times, Patrice Wendling cited three goals behind Duncan Highsmith's overall philosophy, known as "the accountable organization": reduce bureaucracy, increase employee motivation, and further continuous improvement.

Company Perspectives:

We lead our industry segment by maintaining an unconditional commitment to our customers and by increasing efficiency through an organizational structure that moves decision-making closer to the task. Our commitment to education and information extends to our employees, who are encouraged to choose from an innovative menu of wellness, health risk management, and in-house education programs.

In Wendling's article, Hugh Highsmith remarked on the impact his son had on the company's evolution, stating: "In the beginning, we were more of a conventional company. I give my son, Duncan, a lot of the credit for letting the people feel they are a part of the company. It is wonderful to walk around the building and see people truly interested in what they are doing. In the old days the idea was to control workers, but the new way is to let them blossom on their own. I think the employee does better that way and the company gets that back. We are very fortunate."

A number of key developments occurred at Highsmith during the 1990s. In 1993, the Upstart brand was acquired from Hagerstown, Maryland-based Freline, Inc. When the company made its Corruboard line of corrugated storage and organization products—an array of colorful, durable storage boxes, portfolios, magazine files, and drawer units—available to the retail market that same year, sales of these products almost tripled. In addition to select "brick-and-mortar" retailers, catalog retailer Lillian Vernon was among the retail channels that began offering the Corruboard line to the consumer market. By this time, Corruboard was the only line of products that Highsmith manufactured itself.

Making Corruboard available to the consumer market was only the beginning of Highsmith's foray into the retail market. In January 1994, the company purchased Madison, Wisconsin-based Madison School Supply Store, followed by Pooh Corner Bookstore in the same city the following year. In the January 5, 1995 issue of the Capital Times, Duncan Highsmith revealed long-term plans to "start a national chain of side-by-side stores designed to integrate school and home learning environments."

While Highsmith closed Madison School Supply in April 1995, it opened a combined Pooh Corner/Highsmith Education Station store in east Madison at the same time and also maintained operations at its first Pooh Corner store. The new combined store included 6,000 square feet of space at Highsmith Education Station and 1,000 square feet at Pooh Corner. Not including books, the retail operation offered 11,000 different items—including software, toys, puzzles, and posters—as well as a classroom area for teacher workshops. This new location was so successful that in February 1996 Highsmith announced plans to close the stand-alone Pooh Corner store it acquired in 1994 and open another combined Highsmith Education Station/Pooh Corner location in west Madison.

In 1999, Highsmith announced it would open a third store in Eau Claire, Wisconsin, and rename all three of its stores as MindSparks. In the July 13, 1999 issue of the Capital Times, Highsmith president Paul Moss provided insight into the new name, explaining: "The name MindSparks accurately captures how our educational toys, books and teacher materials energize lifelong learners. It identifies us as an exciting educational resource and allows us to have an identifiable brand name that we can protect as we expand."

By 1995, Highsmith's employee base numbered 240, and the company recorded approximately $50 million in annual sales. The following year, Duncan Highsmith established a rather innovative and proactive business practice referred to as "Life, the Universe, and Everything"—a phrase inspired by Douglas Adams' book Hitchhiker's Guide to the Galaxy.As Leigh Buchanan explained in the January 1999 issue of Inc., the practice involved Highsmith and his corporate librarian gathering interesting material from a wide variety of sources, including newspapers, online databases, Web sites, magazines, television, radio, and even conversations with others. Each week, the pair spent two hours sifting through their notes and material, which covered a wide range of subjects. Relevant information was eventually synthesized and stored in a database.

According to Buchanan, "In this eclectic mix [Duncan Highsmith] is searching for nascent trends, provocative contradictions, and, most important, connections that could eventually reshape his business." Ultimately, "Life, the Universe, and Everything" enabled Highsmith to look at the long view outside of the organization. This strategy stemmed from an early 1990s sales dip brought on by a decrease in school funding which, according to Duncan Highsmith, possibly could have been avoided by paying better attention to certain conditions.

During the 1990s, Highsmith received national recognition for its commitment to employee wellness. After learning in 1989 that insurance costs were to rise an astronomical 53 percent, the company developed a voluntary program called Wellpower Plus to keep workers healthy and manage rising healthcare costs. It offered financial incentives for employees to stay well and provided opportunities for doing so through a combination of health screening tests, education, and exercise classes. In addition to offering an outdoor track where employees could power walk, Highsmith provided them with access to a variety of exercise classes, including step, aerobics, and circuit training.

Key Dates:

1954:: Hugh Highsmith purchases the magazine Farmer's Digest.
1956:: Highsmith establishes his company in a three-room suite in Fort Atkinson.
1958:: Highsmith relocates to a 3,000-square-foot farmhouse on Curtis Mill Road.
1966:: Growth prompts the company's move to a new 12,000-square-foot facility east of Fort Atkinson.
1969:: Hugh Highsmith sells Farmer's Digest and focuses solely on marketing supplies for various sectors.
1976:: Hugh Highsmith's son Duncan joins the company as director, design/research.
1983:: Highsmith offers 20,000 items to roughly 200,000 customers, 70 percent of which are libraries.
1987:: Duncan Highsmith succeeds his father as president and CEO; sales reach approximately $35 million.
1993:: Highsmith is one of only 21 U.S. companies to receive the Wellness Councils of America Gold Award.
1994:: Madison School Supply Store is acquired, marking Highsmith's entry into the retail market.
1999:: Highsmith renames all of its retail stores Mind-Sparks.
2001:: Highsmith exits from the retail market, selling its four MindSparks stores to Moline, Illinois-based Wise Owl Ltd.
2003:: Duncan Highsmith succeeds his father as company chairman, with Hugh Highsmith remaining as chairman emeritus.

In October 1993, Highsmith was one of only 21 U.S. companies to receive the Wellness Councils of America Gold Award. In the May 1995 issue of Inc., Duncan Highsmith spoke of the program's success, revealing that the company's health insurance program was "funded completely by saving in both health insurance and related costs." Furthermore, he said: "Qualitatively, we have much more energetic and self-reliant employees, and that's the best investment."

In time, Highsmith's wellness program evolved along with the company's proactive culture. Measures were implemented to address the emotional needs of employees and help them balance the demands of work and life. These measures included flexible work scheduling, a catalog of work- and non-workrelated courses, and even free legal advice.

During the early 2000s, Highsmith continued to reap benefits from proactive wellness initiatives. On June 24, 2001, the New York Times reported that Highsmith had reduced workers compensation premiums by 24 percent since 1993. Additionally, turnover dropped 14.5 percent to 7.4 percent in only six years. When compared with other companies in its Health Maintenance Organization (HMO) community pool during 1998 and 1999, Highsmith had 22 percent fewer medical claims.

In addition to benefiting from its wellness initiatives, Highsmith also continued to receive national recognition for them. In 2000, the Wellness Councils of America named the company as one of the nation's healthiest. Then, in 2003, Health and Human Services Secretary Tommy Thompson invited Duncan Highsmith and Bill Herman, vice-president of human resources, to participate in an executive roundtable discussion called "Steps to a Healthier US" in Washington, D.C. The NBC Nightly News with Tom Brokaw also featured the company in October 2003 for its leadership status in the corporate wellness arena.

The early 2000s marked Highsmith's exit from the retail market. In 2001, the company sold its four MindSparks stores to Moline, Illinois-based Wise Owl Ltd. In the July 18, 2001 issue of the Capital Times, Highsmith executive vice-president Paul Moss explained that it had not been possible to grow the retail division as originally expected and that Highsmith would concentrate on its core market of libraries and schools.

In May 2002, a difficult economic climate, marked by reductions in state budgets, impacted Highsmith's business. The company was forced to reduce its workforce by 15 percent, cutting 30 workers in one day. Despite these challenging times, Highsmith remained committed to its remaining workers. The following year, the company was recognized for its progressive culture when it was nominated to the Wisconsin Honor Roll and given a Corporate Culture Award. According to the Milwaukee Journal Sentinel for September 17, 2003, the award "recognizes a company for its focus on employee retention, motivation and involvement in the success of the company." The award was co-sponsored by the Journal Sentinel and the Milwaukee office of Deloitte & Touche.

By late 2003, growth had prompted seven major additions to Highsmith's Curtis Mill Road facility. According to the company, these included "the expansion and automation of the warehouse operation, new office areas, a plant-filled atrium and a corporate library." Over the years, the company's culture had truly evolved to role-model status, thanks largely to Duncan Highsmith's enlightened, empowering approach to business.

Duncan Highsmith succeeded his father as company chairman in 2003, with Hugh Highsmith remaining as chairman emeritus. Together, the two men had successfully built their family-owned enterprise into a world library supply leader and established a workforce committed to the company's continued success.