Printer;

He may be the only CEO in the country who runs a school for his customers and sells his latest technology to his competitors.

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Even before he came our printer, we realized there was something special about Harry V. Quadracci. He once described his fabulously successful and profitable company as a "social experiment," and to an outsider, there seems to be some truth to it. For in the course of taking Quad/Graphics Inc. from less than $1 million to more than $300 million over the past 15 years, Quadracci has broken most of the rules.

Early on, for example, he put his employees on a three-day, 36-hour workweek, which made it easier for the company to keep its presses running round the clock and sent productivity shooting up 20%. Later, he launched Camp Quad, where customers come to be educated about the printing business, and bought a little red schoolhouse for employee-training sessions.He shares ownership with employees -- they now control more than 40% of the company's stock -- and lets them run new divisions as entrepreneurial ventures. One of those divisions, Quad/Tech, develops new printing technologies, which it then sells to other printers, including Quad's competitors. Last year, in fact, Quad/Tech accounted for a significant portion of Quad/Graphics' profits.

Quadracci attributes much of his company's success to "thinking small." But that has not stopped him from signing up some of the biggest names in magazine publishing -- including Newsweek, U.S. News & World Report, and Time -- as customers. He discussed his management experience and his social experiment with INC. editors George Gendron and Bo Burlingham at his office in Pewaukee, Wis.

INC.: There's been a good deal written about your company over the years -- the aggressive research-and-development effort, the education center for employees and customers, the three-day workweek, and so forth. But readers out there who run small companies say to themselves, "That's nice, but I can't afford that. My business isn't large enough. I'm still worrying about survival."

QUADRACCI: You know, whether it's R&D or employee training or customer service, it's always easy to say you'll do that when you have the money. But the truth is that if you don't do it at the beginning, you'll never do it. There's nothing we do now at Quad/Graphics that we didn't do during our first five years. In most cases, anybody can do these things -- it's just a matter of thinking small, of starting in some small way -- of doing something.

INC.: Can you give a for instance -- say, R&D?

QUADRACCI: As I said, it goes back to the very beginning, when we had about 60 employees, $4 million in sales, and one press that didn't work very well.As I looked around, I could see what was happening -- that there was tremendous consolidation going on in the industry, that 35,000 people had already lost their jobs, that magazines such as Life and Look were going out of business.

It was also pretty clear that the technology of printing was about to change very rapidly. I figured that the only way we were going to survive all that was to get big pretty damn fast. And the only possible way I could think of to get big was to be on the leading edge technologically -- high tech. So R&D wasn't something that we considered a luxury, something we might do later. R&D was survival.

INC.: But you were a printer, not an inventor. It's one thing to buy the most modern presses. It's another to start developing them, which is what you eventually got into.

QUADRACCI: In one sense, we faced the same problem a lot of manufacturing companies face. Historically, millions of dollars had been spent to bring electronics to the printing industry -- color separations, filmmaking, typesetting -- but all of these advances seemed to stop at the pressroom door. And there was a very good reason for it. Because while there were almost an infinite number of companies in the market selling better color separators and cameras and typesetting equipment, the number of people who needed computerized presses -- which is what we're really talking about -- was rather limited.

INC.: How limited?

QUADRACCI: Guessing, maybe 50 in the United States, maybe another 50 in the rest of the world.

INC.: So there was not a whole lot of incentive for press manufacturers to invest in R&D?

QUADRACCI: In fact, if anything, the market for presses was probably shrinking. And most of the established printers already had their presses, just as they had their clients. So they weren't thinking the way I was, which in one sense gave us a tremendous advantage -- we could really start out fresh, with everything new and very little that was old.

INC.: But you were also a small company, without much cash to throw around. How does a company like that get into R&D in any formal way?

QUADRACCI: Like so many things, it sort of just evolved. At first, it was shopping around, in Europe mostly, for the most advanced ideas. Then in 1978, we bought a particular piece of equipment that was supposed to assist us in preparing the press and save us paper during that initial phase when the paper first begins to roll on a particular job. Maybe we were going to save 1% on our paper. And somebody asked the simple question, "Why are we spending $100,000 on a machine that is going to save us 1% at the beginning of the run when as much as 15% is wasted in the middle of the run when the rolls of paper are being changed?" It was a good question. What we knew was that the press operators had always tried to anticipate the roll changes by dialing the expected color adjustments into the press. But it was a gut sort of thing. And so we began to ask, "What would happen if we took a little computer to it and started anticipating the changes in a more sophisticated way? And what if, instead of the press operator looking at the registration, how about if we got a robot to look?" And so we began to try to develop a lens that could do the looking.

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