In dynamic business environments, opportunities often arise faster than entrenched players can form a response. Many organizations have been taken by surprise, unable to see or anticipate new opportunities. For instance, in 1876 William Orton of the Western Union Telegraph Company rejected an offer by Alexander Graham Bell to sell his telephone patents because Western Union could not envision how the telephone would be successful. From 1974 to 1984 the Swiss watch industry lost 30% of the world export market because it was unable to recognize the merits of quartz and electronic technology (Glasmeier, 1991). By 1979, Xerox Corporation's Palo Alto Research Center (PARC) had developed graphical user interfaces, mice, windows and pull down menus, laser printing, distributed computing, and Ethernet, but Xerox failed to exploit these innovations because of management's preoccupation with Japan's encroachment on its core copier business (Port, 1997). UPS, Emery Air Freight, and USPS each considered the idea of an overnight delivery service like that of FedEx, but rejected the concept because they could not foresee a market need (Collins & Lazier, 1992).

In hindsight, it is easy to dismiss these unfortunate business decisions as irrational or even incompetent. Such arguments recognize the competency traps faced by established firms: that despite longer-term returns, most firms are unable to overcome (or see beyond) the short-term costs of adopting new technologies and pursuing new strategies (Christensen, 1997; Leonard-Barton, 1992; March, 1991). The Swiss watchmakers had been building watches the same way for centuries.