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Ecological Niches 235

tion a company can occupy. But it has stringent requirements. The
product has to be essential to a process. The risk of not using it—the
risk of losing an eye, losing an oil well, or spoilage in a tin can—must
be infinitely greater than the cost of the product. The market must be
so limited that whoever occupies it first preempts it. It must be a true
“ecological niche” which one species fills completely, and which at
the same time is small and discreet enough not to attract rivals.
Such toll-gate positions are not easily found. Normally they occur
only in an incongruity situation (cf. Chapter 4). The incongruity, as in
the case of Alcon’s enzyme, might be an incongruity in the rhythm or
the logic of a process. Or, as in the case of the blowout protector or
the can-sealing compound, it might be an incongruity between eco-
nomic realities—between the cost of malfunction and the cost of ade-
quate protection.
The toll-gate position also has severe limitations and serious risks.
It is basically a static position. Once the ecological niche has been
occupied, there is unlikely to be much growth. There is nothing the
company that occupies the toll-gate position can do to increase its
business or to control it. No matter how good its product or how
cheap, the demand is dependent upon the demand for the process or
product to which the toll-gate product furnishes an ingredient.
This may not be too important for Alcon. Cataracts can be
assumed to be impervious to economic fluctuations, whether boom or
depression. But the company making blowout protectors had to invest
enormous amounts of money in new plants when oil drilling sky-
rocketed in 1973, and again after the 1979 petroleum panic. It sus-
pected that the boom could not last; yet it had to make the investments
even though it was reasonably sure it could never earn them back. Not
to have done so would have meant losing its market irretrievably.
Equally, it was powerless when, a few years later, the oil boom col-
lapsed and oil drilling shrank by 80 percent within twelve months,
and with it orders for oil-drilling equipment.
Once the toll-gate strategy has attained its objective, the com-
pany is “mature.” It can only grow as fast as its end users grow.
But it can go down fast. It can become obsolete almost overnight
if someone finds a different way of satisfying the same end use.
Dewey & Almy, for instance, has no defense against the replace-
ment of tin cans by other container materials such as glass, paper,
or plastics, or by other methods of preserving food such as freez-
ing and irradiation.