Putnam, meanwhile, is focusing on the challenges that lie ahead: building volume; winning over listings from the other exchanges; and coming up with new products, such as single-stock futures and options. Now is not the time for hunkering down and retrenching. "We have to challenge well-established businesses," Putnam says. "We have to outsmart them and outthink them. We're running over quicksand: If we stand still, we're dead. I've surrounded myself with smart people, and I tell them that we have to do the hard stuff. I tell them all the time, 'We have to think big.' "

Bill Breen (bbreen@fastcompany.com) is a Fast Company senior editor. For more articles on financial-markets innovation, visit our Web archives.

Sidebar: Innovation by the Book: Jerry Putnam's Plan

Jerry Putnam, founder and CEO of Archipelago Holdings, has three big items on his to-do list -- items that will ultimately determine Archipelago's future.

Get big fast. These days, high-stakes innovation is not a game for pip-squeaks. In March, Archipelago and REDIBook, the fourth- and third-ranked ECNs in terms of volume, completed a merger. The combined entity, which will keep the name Archipelago (Putnam will remain CEO), can already claim trade-execution volumes that nearly match those of Instinet, the top-ranked network. But that's not enough. "We need to get bigger," says Putnam. "There are too many players in our industry; we're all trying to preserve share and grab more. The biggest guy is going to win."

Have bold ideas, flawless execution. Archipelago already claims the highest concentration of servers in Chicago, and the company expects its server farm to keep growing. "We're moving from being a broker-dealer who does what it can to keep everything running to being a company that is an integral part of the national market system, with lots of requirements for redundancy and backups," says Stuart Townsend, Archipelago's CIO. "At this point, it's almost like running a nuclear reactor."

Become the clear alternative. Putnam doesn't expect to bring down Nasdaq and the NYSE. But he does expect to make Archipelago the most compelling alternative to the big guys: "It's not like we're trying to build an online grocery store. There are already tens of millions of investors out there. We just have to win them over."