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leader behaves as a “benevolent monopolist” (the term is Joseph
Schumpeter’s).
A benevolent monopolist cuts his prices before a competitor can
cut them. And he makes his product obsolete and introduces new
product before a competitor can do so. There are enough examples
of this around to prove the validity of the thesis. It is the way in
which the DuPont Company has acted for many years and in which
the American Bell Telephone System (AT&T) used to act before it
was overcome by the inflationary problems of the 1970s. But if the
leader uses his leadership position to raise prices or to raise profit
margins except by lowering his cost, he sets himself up to be
knocked down by anyone who uses entrepreneurial judo against
him.
Similarly, the leader in a rapidly growing new market or new tech-
nology who tries to maximize rather than to optimize will soon make
himself vulnerable to entrepreneurial judo.
Finally, entrepreneurial judo works as a strategy when market or
industry structure changes fast—which is the Familienbank story. As
Germany became prosperous in the fifties and sixties, ordinary peo-
ple became customers for financial services beyond the traditional
savings account or the traditional mortgage. But the German banks
stuck to their old markets.

Entrepreneurial judo is always market-focused and market-driven.
The starting point may be technology, as it was when Akio Morita
traveled to the United States from a Japan that had barely emerged
from the destruction of World War II to acquire a transistor license.
Morita looked at the market segment which the existing technology
satisfied the least, simply because of the weight and fragility of vac-
uum tubes: the market for portables. He then designed the right radio
for that market, a market of young people with little money but also
fairly simple demands with respect to range of the instrument and to
quality of sound, a market, in other words, that the old technology
simply could not adequately serve.
Similarly, the long-distance discounters in the United States who
saw the opportunity to buy from the Bell Telephone System whole-
sale and to resell retail, designed a service first for the fairly modest
number of substantial businesses that were too small to build their
own longdistance system but large enough to have heavy long-dis-
tance bills. Only after they had secured a substantial share of that