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54 THE PRACTICE OF INNOVATION

tion in the “book-reading years,” or even people with higher degrees.
No one knows why this happened. Indeed, no one quite knows
what really happened. Books are still as rare in the typical American
home as before.* Where, then, do all these books go? That we have
no answer to this question does not alter the fact that books are being
bought and paid for in increasing numbers.
Both the publishers and the existing bookstores knew, of course,
all along that book sales were soaring. Neither, however, did anything
about it. The unexpected event was exploited, instead, by a few mass
retailers such as department stores in Minneapolis and Los Angeles.
None of these people had ever had anything to do with books, but
they knew the retail business. They started bookstore chains that are
quite different from any earlier bookstore in America. Basically, these
are supermarkets. They do not treat books as literature but as “mass
merchandise,” and they concentrate on the fast-moving items that
generate the largest dollar sales per unit of shelf space. They are
located in shopping centers with high rents but also with high traffic,
whereas everybody in the book business had known all along that a
bookstore has to be in a low-rent location, preferably near a universi-
ty. Traditionally, booksellers were themselves “literary types” and
tried to hire people who “love books.” The managers of the new
bookstores are former cosmetics salespeople. The standing joke
among them is that any salesperson who wants to read anything
besides the price tag on the book is hopelessly overqualified.
For ten years now, these new bookstore chains have been among
the most successful and fastest-growing segments in American retail-
ing and among the fastest-growing new businesses in this country
altogether.

Each of these cases represents genuine innovation. But not one of
them represents diversification.
IBM stayed in the computer business. And the chain bookstores
are run by people who all along have been in retailing, in shopping
centers, or managing “boutiques.”
It is a condition of success in exploiting the unexpected outside event
that it must fit the knowledge and expertise of one’s own business.
Companies, even large companies, that went into the new book market

This is also true of Japan, the country, that per capita, buys more books than any
other and twice as many as the United States.