Printer;

 

And so eventually we decided to formalize that by offering some training seminars at a campground nearby, which we call Camp Quad. We do it about eight times a year, back to back, about 35 people at a crack.

INC.: Just to play the devil's advocate here -- why go to the trouble and expense of educating customers who will ask more questions and be more demanding? Why not just let them keep on bluffing?

QUADRACCI: Because I want them to print the best magazines at the lowest possible cost, so that they can sell more magazines and more ad pages and we can get more printing. Remember, our customer is really our customers' customer. And frankly, the camp also helps us develop a really harmonious partnership with the customer that makes it easier to deliver a good product and gives us an edge in developing new products that publishers might use.

INC.: Just to get a sense of it, what is your R&D budget, say, for this year?

QUADRACCI: We don't have budgets.

INC.: You don't have budgets?

QUADRACCI: Why should we? You know, for some reason or another, the whole aspect of the information explosion and computers has reached a blind spot when it comes to the accounting group. Why is it that so many companies insist on having a 12-month budget, drawn up in November of one year, based on still-incomplete numbers, that will be the bible for running the company as far away as December of the following year? Why do that when we have a computer now that can give me a profit-and-loss statement today on what we did on a press yesterday? Isn't actual performance a better guide -- a better budget -- than a budget?

INC.: One reason for a budget, perhaps, is to anticipate what capital needs you'll have. In your annual report, you boast that you've just placed one of the biggest orders in printing history -- $50 million worth of equipment. How do you anticipate capital for something like that with no budget?

QUADRACCI: We have a simple rule: if you can finance it, buy it. That's what it comes down to -- ready, fire, aim. We go out and order 14 presses that will be ready in two years, roughly. And then, based on some inquiries and sales calls and my gut feeling about our ability to sell, we may locate two of them in Saratoga Springs, N.Y., maybe another two in Lomira, Wis. But there is no way that you can plan that -- it's more heart than head. It's hunchmanship.

INC.: What's the difference between a hunch and a guess?

QUADRACCI: A hunch is something you have after you go out and talk to your customers, to see what they're feeling -- what they did this year, what they think for 1987. It's taking the temperature of the customers almost daily. And if you're an owner, you've got to be there, you've got to sense it for yourself. There is no substitute for hands on.

That's the problem with a large company. In a large company, managers rely on reports, but you cannot feel reports. You've got to be there -- in the field, in the plant, out in the street. You don't learn the business from salespeople or budget planners. You learn the business from the clients -- who, by the way, love to teach. And on that basis, you're ready to make hunches.

INC.: And doesn't that approach to long-range decision making -- buy it if you can finance it, go on your hunches -- lead to some rather large mistakes?

QUADRACCI: Look, the reason you have a bad-debt reserve is because if you are aggressive in your sales, you're going to have some people who don't pay. The same goes for hunchmanship and planning -- you've got to make allowances for mistakes.

In the technology area, for example, if you don't have what I like to call "perfect failures," then you're not being aggressive enough in your R&D. And the larger you get, the bigger the perfect failures you can afford. We had great success putting two guys in a basement of a summer house -- and as a result we started Quad/Tech. We had a perfect failure when we developed a $780,000 folding machine that didn't work. Three guys worked two years because we felt sure there had to be a better way to deliver a folded page. And when it became apparent finally that it wasn't going to work, they felt terrible about it. But why should they have? By making that mistake, they explored the alternative.

INC.: Trial and error. Start early. Think small. These are your constant refrains.

QUADRACCI: Look, we are living in an age of change -- change that we no longer measure in evoluationary terms. If you're going to succeed in business today, you have to thrive on change, think in terms of change, assume that whatever is here today is going to be different tomorrow. You have to eat change for breakfast -- that's what I tell new employees. And that's the spirit that goes all the way back here -- before we were big, before we were very profitable, before there was a little red schoolhouse or Quad/Tech or Camp Quad. The trick was to keep telling ourselves, "There must be a better way." And most of the time, there has been.

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