When deciding how to respond to a threatening new entrant, companies often assume that they are facing a disruption, that is, an innovation that allows upstarts to build a new market from the bottom up. But new products and services can enter your market from other directions, each distinct in terms of how, where, and when it affects your business. They are all market dislocations — radical breakaways that create new markets and make old markets obsolete. Instead of acting rashly, incumbents should take a step back, diagnose the type of dislocation they are facing, and respond with the appropriate tools and strategies.
