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You Need to Understand the Business Principle of Displacement

By: Tim Berry

 

Business Principle of Displacement

Imagine a bucket of water full to the brim, on a table, right next to a phone and a computer. Now take a brick and drop it into that bucket. Imagine what happens. Water splashes out, right? And that’s probably bad for that phone and computer next to it.

Business Principle of Displacement

That simple story is how I explain the business principle of displacement, in small business, startups, and entrepreneurship. I write it out as:

Principle of displacement: everything you do rules out something else that you don’t do.

The reason this matters so much is that we can’t do everything. So we have to do the most important things. We can’t please everybody. So we have to please the most important, biggest volume groups.

When you decide to add outlier features—used by a few, requested by a few—to a product you are also distracting your team and your product from the main function. And displacement is a legitimate concern as you deal with strategy. Can we expand into schools, from mainly offices? Can we sell to consultants as well as users? In normal growth strategy you have to sort through lots of questions, many possibilities, all with the awareness that you can’t do everything.

Paradox and Strategy

There’s a lot of paradox in managing focus, displacement, and growth.

On the one hand, if you don’t change, you suffer. You can’t just stay focused on the main thing. You have to deal with new possibilities, which sometimes means new products, or new markets.

On the other hand, if you are constantly after the latest shiny new thing, you risk losing focus on what matters most. You don’t want to lose your core while you’re looking to expand.

What I like about real-world business strategy, for startups and small business, is that there is always an other hand.

Published: May 31, 2016
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Tim Berry

Tim Berry is co-founder of Have Presence, founder and Chairman of Palo Alto Software, founder of bplans.com, and a co-founder of Borland International. He is author of books and software including LivePlan and Business Plan Pro, The Plan-As-You-Go Business Plan, and Lean Business Planning, published by Motivational Press in 2015. He has a Stanford MBA degree and degrees with honors from the University of Oregon and the University of Notre Dame. He taught starting a business at the University of Oregon for 11 years.

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