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Source: Industry and Market Structures 83

III

WHEN INDUSTRY STRUCTURE CHANGES
Four near-certain, highly visible indicators of impending change
in industry structure can be pinpointed.
1. The most reliable and the most easily spotted of these indica-
tors is rapid growth of an industry. This is, in effect, what each of the
above examples (but also the automobile industry examples) have in
common. If an industry grows significantly faster than economy or
population, it can be predicted with high probability that its structure
will change drastically—at the very latest by the time it has doubled
in volume. Existing practices are still highly successful, so nobody is
inclined to tamper with them. Yet they are becoming obsolete. Neither
the people at Citroen nor those at Bell Telephone were willing to
accept this, however—which explains why “newcomers,” “out-
siders,” or former “second-raters” could beat them in their own mar-
kets.
2. By the time an industry growing rapidly has doubled in volume,
the way it perceives and services its market is likely to have become
inappropriate. In particular, the ways in which the traditional leaders
define and segment the market no longer reflect reality, they reflect
history. Yet reports and figures still represent the traditional view of
the market. This is the explanation for the success of two such differ-
ent innovators as Donaldson, Luflun & Jenrette and the Midwestern
“intelligent investor” brokerage house. Each found a segment that the
existing financial services institutions had not perceived and therefore
did not serve adequately; the pension funds because they were too
new, the “intelligent investor” because he did not fit the Wall Street
stereotype.
But the hospital management story is also one of traditional aggre-
gates no longer being adequate after a period of rapid growth. What
grew in the years after World War II were the “paramedics,” that is,
the hospital professions: X-Ray, pathology, the medical lab, thera-
pists of all kinds, and so on. Before World War II these had barely
existed. And hospital administration itself became a profession. The
traditional “housekeeping” services, which had dominated hospital
operations in earlier times, thus steadily became a problem for the
administrator, proving increasingly difficult and costly as hospital
employees, especially the low-paid ones, began to unionize.