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118 THE PRACTICE OF INNOVATION

fabricators to make the articles for which DuPont had already created a
demand and which, in effect, it had already sold. Similarly, aluminum
from the very beginning, right after the invention of the aluminum
reduction process by Charles M. Hall in 1888, began to create a market
for pots and pans, for rods and other aluminum extrusions. The alu-
minum company actually went into making these end products and sell-
ing them. It created the market which, in turn, discouraged (if it did not
keep out altogether) potential competitors.
The third focus is to occupy a strategic position, concentrating on
a key function (the strategy is discussed in Chapter 18 under
Ecological Niches). What position would enable the knowledge inno-
vator to be largely immune to the extreme convolutions of a knowl-
edge-based industry in its early stages? It was thinking this through
and deciding to concentrate on mastering the fermentation process
that gave Pfizer in the United States the early lead in penicillin it has
maintained ever since. Focusing on marketing—on mastery of the
requirements of airlines and of the public in respect to configuration
and finance—gave Boeing the leadership in passenger planes, which
it has held ever since. And despite the turbulence of the computer
industry today, a few leading manufacturers of the computer’s key
component, semiconductors, can maintain their leadership position
almost irrespective of the fate of individual computer manufacturers
themselves. Intel is one example.
Within the same industry, individual knowledge-based innovators
can sometimes choose between these alternatives. Where DuPont, for
instance, has chosen to create markets, its closest American competi-
tor, Dow Chemical, tries to occupy a key spot in each market seg-
ment. A hundred years ago, J. P. Morgan opted for the key function
approach. He established his bank as the conduit for European invest-
ment capital in American industry, and furthermore in a capital-short
country. At the same time, Georg Siemens in Germany and
Shibusawa Eichii in Japan both went for the systems approach.
The power of a clear focus is demonstrated by Edison’s suc-
cess. Edison was not the only one who identified the inventions
that had to be made to produce a light bulb. An English physi-
cist, Joseph Swan, did so too. Swan developed his light bulb at
exactly the same time as Edison. Technically, Swan’s bulb was
superior, to the point where Edison bought up the Swan patents
and used them in his own light bulb factories. But Edison not
only thought through the technical requirements;