Diagnosing Dislocation

New products and services can enter your market from other directions, each distinct in terms of how, where, and when it affects your business. These are market dislocations — radical breakaways from the existing market that occur when a company introduces a business model or a product that sits apart from those of competitors.

Clearly, not all upstart threats are alike — and misdiagnosing your new competition can lead you to respond in a way that can bring further harm to your business. Incumbents often move early into new technologies, even if it means undermining or cannibalizing their existing businesses. Sometimes that’s the right thing to do. But other times it can backfire in devastating ways. Instead of acting rashly, incumbents should take a step back, determine what type of dislocation they are facing, and respond with the appropriate tools and strategies. Not doing so can lead to lost customers and slipping profits — or worse.

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