Harvard Business School Working Knowledg e Archive

From Factory to Family: The Creation of a Corporate Culture

4/9/2001
The Larkin Company of Buffalo, New York, created a unique corporate culture with its attitude toward customers and employees. In 1902, the company commissioned Frank Lloyd Wright to design their headquarters with the intent of incorporating these concepts into the architectural design. Today the Larkin Administration Building is recognized as one of Wright's masterpieces.

From its origins in 1875 as a modest soap manufacturer in Buffalo, New York, the J.D. Larkin Company grew dramatically during the 1890s to become a major concern. The company's annual sales rose from about $220,000 in 1892 to over $15 million in 1906.  1

The story of Larkin's rapid rise from local soap producer to national mail-order company is enlivened by the involvement of two prominent turn-of-the century cultural icons and pioneers in their respective fields: Elbert Hubbard and Frank Lloyd Wright. Hubbard was responsible for the company's advertising and marketing innovations. Wright designed homes for Larkin executives and, more notably, the corporate administration building—completed in 1906, this marvelous structure was Wright's first major commercial commission.

Quotation
Employing the skills of Frank Lloyd Wright, the Larkin Company transformed an abstract corporate culture into a tangible physical representation when it opened the Larkin Administration Building.
Quotation

In order to sell its soap and related products through the mail, Larkin came to rely on a dedicated army of small-town and rural women to serve as de facto sales agents. The company drew these women, and often their children, into buying clubs by offering a wide array of valuable premium gifts, contingent upon sales volume and method of payment. Club organizers, called "secretaries," recruited family, friends, and neighbors to buy Larkin products and also to share in the premium offerings, which enabled these families of modest financial means to furnish their middle-class homes cheaply. The company called this strategy "The Larkin Idea" and touted it with the motto, "From Factory-to-Family: Save All Cost Which Adds No Value." Larkin promoted itself as "the only Great Manufactories in the World Devoted to Cooperation with Consumers."  2

The Larkin Company's success owed much to the development of its unique corporate culture.

The Larkin Administration Building: The Physical Representation of the Corporate Culture

In 1906, employing the skills of Frank Lloyd Wright, the Larkin Company transformed an abstract corporate culture into a tangible physical representation when it opened the Larkin Administration Building. The building was intended to be both practical and yet designed to convey the humane principles Larkin liked to project.  10

The principal mail-order activities occurred on all floors, except the top, which housed kitchen facilities. Wright, Heath, and Marts collaborated to create a structure that maximized office efficiency, from the layout of the floor plan, to the ordering of the departments, to the arrangement of desks and built-in file cabinets. Larkin executives occupied the main floor. Martin and Heath and their subordinates were housed on an entire floor beneath the skylight and also under the balcony. This unique arrangement left the executives with no privacy and without the status conferred by being allotted space on the top floor of an office building. Advertising executives' offices were located in the same area. John D. Larkin and his sons were located on the other end of the floor, also in semiprivate offices and close to the Seneca Street factories, where they felt most at home.  11 The unorthodox seating arrangements were consistent with the image Larkin wanted to project of open, familial relations.

Because it was located in a noisy, sooty, and grimy industrial area of Buffalo, the building was hermetically sealed and lighted mostly from skylights. Advanced heating and ventilation systems, including one of the earliest forms of air conditioning, provided comfort to the office force and also ensured that correspondence with its customers remained pristine, as any soiling would be potentially damaging to a soap and pure food company's reputation.  12

A five-story annex, where most of the welfare activities took place, provided employees with privacy and refuge from the demanding workday. The first floor had a large semicircular reception desk and a fireplace in the visitor's waiting area. Metal lockers, wash basins, showers, and wall-hung toilets were located on the second floor. A cozy fireplace-heated lounge area, outfitted with furniture designed by Wright, could be found on the third floor. On either side of the lounge were emergency rooms with cots, an anteroom, and a toilet room. The fourth floor, which had the lowest ceilings, was divided into three spaces: a classroom, where personnel were instructed in grammar and writing; a small branch of the Buffalo Public Library; and a YWCA room, where girls would attend activities designed to foster self improvement. Finally, the top floor housed a spacious dining room with kitchen facilities. All "Larkinites"—employees, executives and guests—dined together in the same open space. Wright deliberately made the annex small and access to it difficult so it would not be overused. The only exception was the dining area, which accommodated 600 people.  13

Inscribed on the red sandstone walls of the building's interior and adorning the sculptures displayed outside were inspirational messages, written largely by William Heath, that extolled the importance and virtues of work and "declared the aspirations and identity of the Larkin Company.  14

The messages were most evident in the main building's light court, which provided a setting bathed in diffused light. This atmospheric setting highlighted the company's conflicting impulses toward employee welfare on the one hand and workplace efficiency on the other. Inscriptions from the Sermon on the Mount were juxtaposed with fourteen trios of inspirational words, including "Co-operation, Economy, Industry," "Generosity Altruism, Sacrifice," and "Integrity, Loyalty, Fidelity."

Wright spoke eloquently about the ideal of domesticity he tried to build into the corporate structure, which he called "this family (italics mine) home": "the family-gathering under conditions ideal for body and mind counts for lessened errors, cheerful alacrity and quickened and sustained intelligence in duties to be performed . . ."  15 Larkin executives also commissioned Wright to build their own private residences, workers' row houses in Buffalo, and the company's pavilion for the 1907 Jamestown Tercentennial Exposition.  16 p>

The Larkin Administration Building epitomized the success of "The Larkin Idea." Its inauguration ushered in the glory years of the Larkin Company. Sales continued to rise until 1920, the year of its greatest success, which also marked the beginning of its downward turn. Yet the company would continue to thrive for only one more decade.

Epilogue

Sales of Larkin products were buoyant through the 1910s, and tapered off in 1920 at around $28 million. Then sales began a permanent decline starting around 1925, though the company earned profits through 1930. But the 1930s ushered in a bleak financial period for the Larkin Company in which it lost money every year, including $1.4 million in 1932 and over $1 million in 1937.  17

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Excerpted with permission from the article "From Factory to Family: The Creation of a Corporate Culture in the Larkin Company of Buffalo, New York" in Business History Review, Fall 2000.

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Howard W. Stranger is assistant professor of labor relations and human resources at the State University of New York College at Buffalo.

Larkin's Marketing Strategy

Trade CardDuring its first decade in operation, Larkin marketed two main branded soaps—Sweet Home Soap, a yellow laundry soap, and Crème Oatmeal, a toilet soap—to consumers through the usual channels of jobbers and wholesalers. Soon, however, the company began experimenting with new marketing methods that would eventually produce "The Larkin Idea" in 1885.

In 1881, the company initiated door-to-door sales to private residences and storekeepers to complement its mail solicitation to storekeepers. To establish brand identity, Hubbard inserted a color picture, with the company logo on it, in each box of soap. Although premiums were not new, Hubbard's tactic of offering gifts directly to customers instead of having the retailer hand them out represented a new approach.  3. By the 1890s, premiums were a vital part of Larkin's business.

The growth of the company's mail-order business was spurred by two separate events. First, both Hubbard and Frank Martin suggested that Larkin replace the cumbersome standard twelve-cake package of soap with a lighter three-cake box of soap for ten cents. Second, postal rates fell in 1883. To capitalize on the favorable rates, Larkin added small premiums to soap boxes as an inducement for customers to buy more soap. These premiums were modest in scale: handkerchiefs with toilet soap, towels with soap powder, one-cent coins. Eventually, Larkin inserted certificates into the packaged products, which could be redeemed by mail at the Buffalo office. This action paid handsome dividends. By 1885, the company eliminated all middlemen, including its own salesmen.  4 Larkin was among the first large-scale manufacturers to eliminate all dealers—wholesalers, retailers, traveling salesmen, and brokers, representing the entire middle of the distribution chain.  5 This became "The Larkin Idea," which evolved, in tandem with the motto "From Factory-to-Family: Save All Cost Which Adds No Value" to become the company's operating philosophy 6

In 1886, Elbert Hubbard created the "Combination Box," a six dollar assortment of toilet soaps shipped for thirty days' approval. This package was augmented in 1891 with the ten-dollar Combination Box containing one hundred bars of Sweet Home Soap, nine small boxes of fine toilet soaps and creams, and a premium valued at ten dollars retail. Both packages contained enough soap to last the average family a year at a price that amounted to roughly one week's pay for that family.  7 The purchase of these boxes entitled customers to certificates that could then be exchanged for selected items of their choice."  8

"The Larkin Idea" was part marketing innovation and part corporate "family building." Historian Jack Quinan calls it an investment pact between the company and the consumer. "If the customer was willing to commit ten dollars ... to a direct purchase of a year's supply of soap...then the Larkin Company agreed to share the advantage in the form of an attractive premium," wrote Quinan. "Inherent in this unusual business arrangement was a quasi-familial intimacy which the Larkin Company promoted in its advertising by calling customers 'Larkinites.'"  9 It also was the first step toward the development of a strong corporate culture, which took firmer shape in the 1890s with the birth of cooperative buying clubs.

Footnotes

1. Larkin financial records, Darwin D. Martin Papers, mss. B76-1, box 2, folder 3, Buffalo and Erie County Historical Society (BECHS), herein referred to as Martin Papers, BECHS. Given the frequent name changes, I will refer to the company generically as the Larkin Company or Larkin throughout this paper.

2. The Home of the Larkin Idea (1906), publicity pamphlet for factory tour guests, vertical files, herein referred to as BECHS.

3. Soap producer B.T Babbitt began using premiums in exchange for quantities of soap wrappers as early as 1851. Most soap producers made use of this selling technique at one time or another. Laird, Advertising Progress, 53-4.

4. Quinan, Frank Lloyd Wright's Larkin, 12.

5. There is no evidence to refute Martin's claims.

6. The Larkin Idea, The Pan American Exposition Number 1, Buffalo, March 1901, BECHS. Not until 1920 did the largest soap producer, Proctor & Gamble, announce to wholesalers and retailers that it would begin selling directly to retailers in July, bypassing other middlemen. Oscar Schisgall, Eyes on Tomorrow: The Evolution of Proctor & Gamble (Chicago, 1981), 88-92. Compared with P & G, known for its advertising, Larkin was more innovative in selling.

7.Margaret Schlei, "The Larkin Company—A History" (M.A. thesis, University of Buffalo, 1932, 12-13); Quinan, Frank Lloyd Wright's Larkin, 12-13.

8. After 1893 the company dropped combination boxes and replaced them with premiums with any ten-dollar order of Larkin products, or individually from the premium lists first begun in 1893. Larkin, John D. Larkin, 70-1.

9. Quinan, Frank Lloyd Wright's Larkin, 12-13. The Larkin Company went to great lengths to try to convince customers that the "Factory-to-Family" plan was superior to both retail and installment buying. For example, in the October 1906 Larkin Idea, an article titled "The Wasteful Installment-Plan" detailed the different cost structures and savings realized from Larkin's selling methods. Using an example of the Larkin Mantel Clock No. 35 premium, the company demonstrated how the same clock, costing five dollars of a ten dollar soap purchase, would cost the consumer at least twelve dollars under the installment plan. The article concluded by noting how Larkin's "Factory-to-Family" dealing had all the advantages of the installment plan, primarily the easy payments. In addition to club dues of a dollar per month, "co-operation and economic methods of manufacture here give money three times the buying power it would have under an installment system." The Larkin Idea (October 1906), 1—3, BECHS. Articles similar to this one appeared in numerous company publications directed at its customers.

10. Ourselves, 15 June 1903, LCR, BECHS. 84.

11. Quinan, Frank Lloyd Wright's Larkin, 38, 44-56. Quinan's book provides the best scholarly treatment of the Larkin Administration Building.

12. Ibid., 56-66.

13. Ibid., 76-84.

14. Quinan, Frank Lloyd Wright's Larkin, 89. Also see chapter 5 for a detailed discussion of the messages inscribed on the building.

15. Ibid., Appendix G.

16. The row houses were never built. Henry-Russell Hitchcock, In the Nature of Materials, 1887-1941: The Buildings of Frank Lloyd Wright (New York, 1988), 55. The Jamestown fair celebrated the three hundredth anniversary of the Jamestown, Virginia, settlement. The front section of Wright's building contained a large display area where Larkin showed off its many products and premiums. The rear space contained a theater used to show films and stereopticon views of Buffalo, Niagara Falls, and Larkin's factories. Trolley cars linked the Larkin pavilion with the others at the fair. At its peak, 4,000 people attended the exhibit on July 4. They were likely impressed not only by the dazzling display of goods, but also the building that won the exposition's gold medal for design excellence. Carla Lind, Lost Wright: Frank Lloyd Wright's Vanished Masterpieces (New York, 1996), 150—1. Lind notes the U.S. Navy bought the land in 1917 to create the Norfolk Naval Base. The Larkin pavilion was destroyed, although some structures remained and became offices; The Larkin Idea May 1907, 11—13, BECHS.

17. Larkin financial data, box 3, folder 7, LCR, BECHS.