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Source: Industry and Market Structures 81

middle-class reliability. Citroen would have seemed to be ide-
ally positioned for the market niche Volvo has taken over. But
Citroen failed to think through its business and to innovate; as
a result, it has neither product nor strategy.

II

THE OPPORTUNITY
A change in industry structure offers exceptional opportunities,
highly visible and quite predictable to outsiders. But the insiders per-
ceive these same changes primarily as threats. The outsiders who
innovate can thus become a major factor in an important industry or
area quite fast, and at relatively low risk.
Here are some examples.
In the late 1950s three young men met, almost by accident, in New
York City. Each of them worked for financial institutions, mostly
Wall Street houses. They found themselves in agreement on one
point: the securities business—unchanged since the Depression twen-
ty years earlier—was poised for rapid structural change. They decid-
ed that this change had to offer opportunities. So they systematically
studied the financial industry and the financial markets to find an
opportunity for newcomers with limited capital resources and practi-
cally no connections. The result was a new firm: Donaldson, Lufkin
& Jenrette. Five years after it had been started in 1959, it had become
a major force on Wall Street.
What these three young men found was that a whole new group of
customers was emerging fast: the pension fund administrators. These
new customers did not need anything that was particularly difficult to
supply, but they needed something different. And no existing firm had
organized itself to give it to them. Donaldson, Lufkin & Jenrette
established a brokerage firm to focus on these new customers and to
give them the “research” they needed.
About the same time, another young man in the securities business
also realized that the industry was in the throes of structural change
and that this could offer him an opportunity to build a different secu-
rities business of his own. The opportunity he found was “the intelli-
gent investor” mentioned earlier. On this, he then built what is now a
big and still fast-growing firm.