The rapid advancement of artificial intelligence (AI) has positioned it as a critical lever for business transformation and competitive advantage. However, the challenge for organizations lies in understanding their readiness for AI integration and the potential impact of AI-driven market disruptions. This paper introduces the AI-Readiness and Market Dynamics Disruption Index (AIM-DDI) Framework, an innovative approach designed to evaluate an organization’s preparedness for AI and its ability to navigate and capitalize on market disruptions. By assessing both internal capabilities—spanning AI strategy, infrastructure, talent, implementation, and ethics—and external market dynamics—considering customer expectations, competitor AI maturity, industry disruption potential, regulatory environment, and the AI talent ecosystem—the AIM-DDI Framework provides a comprehensive perspective on an organization’s position and potential strategic directions in the AI-driven landscape. Through a detailed examination of AI’s role in business strategy, innovation, and competitive dynamics, this paper elucidates the pivotal influence of AI on strategic decision-making and market positioning. The AIM-DDI Framework offers a holistic toolkit for organizations to identify their strengths, pinpoint areas for improvement, and strategically leverage AI for sustainable competitive success.