Becoming Your Own Toughest Competitor

It may sound strange, but there are times in business when you must compete with yourself. This is especially true in times (like ours) of rapid technological change. Innovations that render your existing products and services obsolete are, of course, a threat to your business. But those same innovations can also give you the opportunity of a lifetime--if you're courageous enough to embrace the new order and drive your old products or services out of business before anyone else gets the chance to.

Somebody who's been there--not once or twice, but three times--is Gail Ludewig, CEO of TotalWorks Inc., a Chicago-based graphics, layout and content management firm. Founded 75 years ago by Ludewig's grandfather, TotalWorks was for most of its history a traditional typesetting company using "hot type" technology--basically, pieces of metal that were set by hand in rows on wooden blocks. Then, in the early 1970s, the printing industry began converting to "cold type"--strips of film that were cut and then pasted mechanically onto boards. TotalWorks became a leader in embracing the new technology, even going so far as to buy an IBM 360 mainframe computer for the business. "I remember the computer took up a whole room that was as big as our entire offices are now," Ludewig recalls.

Fast forward to the late 1980s, when Ludewig joined the family business after 15 years in the financial services industry. The desktop publishing revolution was in full swing--remember Aldus Pagemaker and Adobe PostScript?--and personal computers were enabling customers to do work themselves that they previously would have farmed out to firms like TotalWorks.

"I was extremely lucky to join TotalWorks at this time," says Ludewig, "because I didn't know the old stuff, and unlike other typesetters, I'd had experience with personal computers." The fundamentals of TotalWorks' business changed overnight, as the agencies and designers that had been its traditional customers became its competitors, using desktop publishing software to take their typesetting work in-house. So what do you do with competitors? "You go after their customers," says Ludewig.

Having decided that TotalWorks' strength was in providing value-added services, Gail made the decision to get away from cold type quickly, even though TotalWorks still had customers for it. "We just went out, bought the most widely used off-the-shelf software products for desktop publishing, and went into the business of helping people use that software to solve specific problems. We stopped marketing to agencies and designers, and started marketing to their customers--the end users."

The strategy paid off. Of the more than 100 typesetting firms that existed in the Chicago area in 1990, only three or four are still in business. One of them is TotalWorks, with sales more than four times what they were a decade ago.

Fast forward again to the mid-1990s and the birth of the Internet. "The Internet was and is about up-to-date, current information, so TotalWorks was uniquely positioned to take advantage of the Internet revolution," says Ludewig. After all, what is a Web site but a collection of text, graphics, and other content in digital form? And who better to organize that collection--to make sure that the content on a Web site is correct, readable, current and easy to access--than a typesetting and layout firm with 60 years of experience? "We were always in the business or organizing current, up-to-date information, but the medium was print, ink and paper," says Ludewig. "This was just a different medium. Making the transition was a no-brainer."

Ludewig says TotalWorks is "still totally into the Internet" even after the dot com industry collapse on Wall Street, but she's still keeping one eye open for the next new development in her industry. "When you're in business, you have to constantly reinvent yourself," advises Ludewig. "We've been scared too many times."

One more thing: In making the transition to the Internet content management business, Ludewig made a deliberate decision to stay away from Web site design and other more glamorous Internet services. What TotalWorks does is "the really boring part of the Internet world," Ludewig admits, "but that's where you make your money in a service business. People don't outsource the stuff that's fun, creative and exciting."

I've found that success in a service business often consists of three simple steps: (1) finding a task that absolutely must be done but that people don't enjoy doing (or are afraid of doing), (2) getting the word out that you will perform that task so people don't have to do it themselves, and (3) charging lots of money for doing it. Just keep in mind that if doing something isn't fun for others, it probably won't be fun for you either. So make sure it's something you can stick with over the long haul.

Cliff Ennico is host of the PBS television series MoneyHunt and a leading expert on managing growing companies. His advice for small businesses regularly appears on the "Protecting Your Business" channel on the Small Business Television Network at www.sbtv.com. E-mail him at cennico@legalcareer.com.