Reallocation Decision Tree
A decision framework for determining how much and how fast to reallocate resources when a new gradient is detected.
A decision framework for determining how much and how fast to reallocate resources when a new gradient is detected. Matches reallocation intensity and speed to gradient characteristics, preventing both premature over-commitment and dangerous under-reaction.
When to Use Reallocation Decision Tree
Use after detecting a potential resource gradient to determine appropriate response. Critical when facing existential gradients (like Tencent's mobile transition) or evaluating whether a gradient justifies disrupting current successful operations.
How to Apply
Assess Gradient Strength
Calculate opportunity size (TAM × achievable share × margin), estimate speed of shift, and measure current position (adjacent vs. distant capabilities).
Questions to Ask
- Is the gradient large, fast, and adjacent (10 points) or small, slow, and distant (1 point)?
Outputs
- Gradient strength score (1-10)
Assess Current Position Defensibility
Evaluate if current business is under threat, identify existing moats (network effects, switching costs, brand, IP), and project outcomes if you don't chase the new gradient.
Questions to Ask
- Is current position under threat with weak moats (10 points) or defensible with strong moats (1 point)?
Outputs
- Defensibility score (1-10)
Calculate Reallocation Intensity
Sum scores from steps 1-2 (max 20 points) and match to reallocation percentage.
Questions to Ask
- 16-20: Existential gradient (60-80%)?
- 11-15: Strategic gradient (40-60%)?
- 6-10: Opportunistic gradient (20-40%)?
- 1-5: Exploratory gradient (10-20%)?
Outputs
- Recommended reallocation percentage
Determine Reallocation Speed
Match reallocation speed to gradient speed. Fast gradients (0%→50% in <2 years) require emergency reallocation in weeks-months. Slow gradients (5-10 year transitions) allow staged reallocation over quarters-years.
Questions to Ask
- Is this a fast gradient like mobile 2010-2012?
- Or slow like EV adoption 2015-2030?
Outputs
- Reallocation timeline
- Staged vs. emergency approach