5 You Can’t Manage What You Can’t See Since the risk, complexity, and dynamism around a company’s competitive advantage vary by market, business leaders need to monitor their competitive advantage at the market level. It’s a complex task, but three markers can signal the potential erosion of advantage or opportunities to expand into new spaces: Track the shuffle rate at market level. Signifi cant change in an industry’s shuffle rate—either an increase in the rate itself or in the market share separating leaders and laggards—often signals the risk of erosion of a company’s com petitive advantage. It can also indicate shifts in the factors that determine customers’ purchase decisions, which may present opportunities to move into new growth areas. - - - - - - - - Follow the money. Shifts in start-up, patent, and investment flow activity, among other indicators, can signal the arrival of new competitors (often with very different cost structures), capacity (which can hurt industry economics), value propositions, customer needs, or technologi cal breakthroughs. These factors can reshape industry dynamics and potentially undermine an incumbent’s advantage. Watch acquisitions by players outside the industry. Top performers are more than 50 percent more likely than peers to monitor noncompetitors’ acquisitions of companies whose offerings they compete with, our sur vey shows. Such deals can be early signs of a sea change in an industry. AT&T’s acquisition of a cloud-computing company at a time when cloud was still the domain of tech companies was an example of such a shift. Aside from tracking market-related markers, organizations can monitor internal indicators to assess the strength of their advantage. These include acquisitions that do not pay off as intended, failed entries into new regions or mar ket categories, or unexpected losses of market share or major contracts to companies not previ ously viewed as threats. While the above markers don’t cover all factors that could erode a competitive advantage, tracking them can enable business leaders to objectively recognize change underway. AI tools can help managers rapidly scan for movement in their competitive sets, potential substitutes for their products, growing or declining segments, and mar ket niches that could present new opportunities, as many trends emerge from unstructured data that traditional analyses may not capture. When you focus on growth in areas where you’re already strong, you can capture more customers than your peers, with a lower investment. As the erosion of competitive advantage accelerates in many markets, organizations that identify and extend their advantages enjoy both outsize growth and lower risk. Additionally, when investors can connect a move you’re making with a strength you have, they’re more likely to believe your growth projections. Even in stable market conditions, a company can miss the gradual decline in its com petitive positions until it’s too late. The response of character Mike Campbell in Ernest Hemmingway’s The Sun Also Rises to a question about how he went bankrupt is instructive: “Two ways. Gradually, and then suddenly.” » Andy West is a senior partner in McKinsey’s Boston office, Matt Banholzer is a senior partner in the Chicago office, and Laura LaBerge is a client capabilities director in the Connecticut office. » The authors wish to thank Andrew Wolff, Charlie Baca, Linda Z Li, Mary Helen Matthews, Rebecca Doherty, Sasha Vesuvala, and Whitney Zimmerman for their contributions to this article.