What is Pivoting and how do you use it?
Let's say you've poured your energy and countless hours into crafting what seems to you like the perfect business strategy for your startup. As expected, excitement buzzes in the air as you set your plans in motion. And you're fueled by ambition and the promise of success. Then suddenly, you get struck by an unexpected blow—your strategy falters, and your carefully laid plans don't seem perfect enough. Truth be told, this is a moment that can leave any entrepreneur feeling defeated and asking, "What now?"
When a startup's business strategy fails, it is often very disheartening. Yet, all is not always lost. As a matter of truth, this is precisely where the notion of "pivoting" comes into actualization. Pivoting, a term that has become increasingly popular in the entrepreneurship and business ecosystem at large, is the strategic maneuver that has breathed new life into many ventures and set them on a path to renewed growth and prosperity.
In this article, we'll take a closer look at what pivoting entails and how it can be a game-changer for startups facing challenges. We'll answer questions like:
"When should a business pivot?", and "What are the strategies for effective pivoting?"
What is Pivoting?
Before I define pivoting, let me paint a picture that would help you understand: Assume you're a skilled painter, who's working on a masterpiece. After you're far gone, you realize that somehow the colors aren't blending as you envisioned. And that the canvas doesn't quite reflect your vision. You could stubbornly persist, hoping it will magically transform. Or you could take a step back, pick up a different brush, and even use different paint colors for a new masterpiece that truly reflects your vision.
Pivoting works in much the same way. Pivoting is a strategic business maneuver that involves making a significant change in one or more aspects of a company's operations when the current strategy isn't delivering the desired results. It's more like hitting the reset button and reshaping the direction of the business to overcome challenges and seize new opportunities.
It does not mean giving up on your dreams or abandoning your original ideas. Instead, it means being agile and adaptable, which are traits that are key to thriving in the competitive business arena. Pivoting can take different forms, depending on the specific circumstances. It could involve targeting a different customer segment, changing the product or service offering, exploring new distribution channels, or even entering an entirely new market (more on this later).
Examples of Pivoting
Pivoting can take various forms, depending on the specific needs and circumstances of your business. And all examples of pivoting fall under market, product, and business model. Let's look at a few examples to illustrate the concept more vividly.
- Market Pivot
Sometimes, a startup can realize that its initial target market isn't as receptive to its product or service as anticipated. In this case, the startup needs to adopt a market pivot. A market pivot involves shifting focus to a different customer segment that demonstrates greater demand for or willingness to adopt the offering. For instance, Slack, initially created as a gaming platform called Tiny Speck, pivoted to become the widely successful team communication tool we know today.
- Product Pivot
When a startup discovers that its current product isn't meeting customer needs or isn't generating enough traction, a product pivot might be necessary. This entails reevaluating and reimagining the product to better align with market demands. An example of this is Instagram. Instagram started as a location-based social network called Burbn but pivoted to focus exclusively on photo sharing, which eventually led to its immense popularity.
- Business Model Pivot
Sometimes, the entire foundation of a business needs to be restructured to achieve sustainable growth. This kind of pivoting is called a business model pivot. It involves reimagining how the business creates, delivers, and captures value. One notable example is Netflix, which initially operated as a DVD rental-by-mail service but pivoted to a streaming model that revolutionized the entertainment industry.
These are just a few examples out of numerous others, and these examples demonstrate the power of effective pivoting in any business.
When should a business Pivot?
So, how do you know it's time to pivot? For one, you must know that the signs might be subtle. That's not to say they can't be glaringly obvious too. Either way, the following are the most common scenarios that you can use to tell if your startup needs pivoting:
- Market Validation: If your initial product or service fails to gain traction in the market or receive positive feedback from customers, it may be an indication that you need to reimagine your product or change your target audience.
- Changes in customers' needs/tastes: Over time, customer preferences and needs can evolve. If you observe a significant shift in customer behavior or emerging trends that your current business strategy fails to address, it may be an opportune moment to pivot. This would be so that you could maintain relevance and seize new opportunities.
- Competitive: A crowded and highly competitive market can pose challenges for startups. If you find it difficult to differentiate your business or if competitors have a strong advantage, it might be time to pivot. So that you can identify a unique value proposition or niche that sets you apart and enables you to carve out your own space in the market.
- Advancement in technology: Technology can disrupt industries and create new possibilities. If emerging technologies have the potential to render your current business model obsolete or if there are innovative solutions that can enhance your product or service, a pivot may be necessary to leverage these advancements and stay ahead of the curve.
- Financial limitations: Financial constraints or a lack of sustainable revenue streams can be a signal that a pivot is needed. If your current business model struggles to generate sufficient profits or secure funding, exploring alternative revenue streams, cost structures, or pricing models might be the best option for the survival and growth of your business.
- Internal reflection/ a change in perspective: In a world where change is a constant phenomenon, your objectives, vision, and values may alter after your business has been operating for a while. And sometimes, internal assessments reveal gaps or inefficiencies within your organization. If you identify structural or operational issues that hinder your ability to achieve desired outcomes, a pivot could involve reevaluating your internal processes, team composition, or even your core values to drive meaningful change.
Strategies for an Effective Pivoting
So far, we've answered the "what is" question. We've also answered the "when to" question. Now is the time to answer the "how to" question. So this brings us to uncovering the right approaches—call them methods or strategies for effective pivoting.
- Assess and Analyze
Recall that before you decided to venture into your startup, you conducted market research and even validated your business idea. Of course, these steps are paramount before launching your business. Now, to pivot effectively, there's every need to start by thoroughly assessing your current business situation. Analyze market trends, the competitive landscape, customer feedback, and financial data. So you look for patterns and insights that can guide your pivot strategy by asking questions like, "What are our unique strengths and weaknesses?" and "What are the emerging opportunities in the market?"
- Customer-Centric Approach
One of the most important aspects of a successful pivot is understanding your customers. Remember, they're even the paramount cause of your pivoting. So engage with them through surveys, interviews, or focus groups to gain insights into their needs, pain points, and preferences. Use this information to shape your new direction. For example, if you discover that customers want a more affordable version of your product, you can pivot your pricing strategy to accommodate their demands.
- Agile Experimentation
Embrace an agile mindset and adopt a culture of experimentation during the pivot process. Rather than making drastic changes all at once, take small steps and test different ideas. For instance, if you're pivoting your software platform, release a limited beta version to a select group of users and gather feedback. This iterative approach allows you to learn quickly, make data-driven decisions, and refine your strategy to better suit market demand.
- Pivot Direction
Is it possible to successfully pivot without direction? Never! So determine the specific direction of your pivot based on your analysis and customer insights. Decide whether you need to pivot your target market, adjust your product or service offering, or even change your entire business model. Set clear goals for the pivot and define what success looks like. This clarity will guide your decision-making process and ensure a focused pivot strategy.
- Leverage Existing Assets
Identify the assets and strengths your business already possesses that can be leveraged in the pivot. These could include your team's expertise, intellectual property, brand reputation, or existing customer base. For example, if you're pivoting from B2C (business-to-consumer) to B2B (business-to-business), you can leverage your existing customer relationships and industry knowledge. Leveraging existing assets can expedite the pivot process and give you a competitive advantage. Companies that maximized this opportunity include Instagram, Twitter, and even Netflix.
- Iterative Learning
As the old saying goes "learning never ends". Pivot is an ongoing process that requires continuous learning. Monitor and measure key metrics to evaluate the impact of the changes. Stay open to feedback from customers, employees, and stakeholders, and use that feedback to refine your strategy. You can even seek advice from founders who have successfully pivoted or study their methods. Be ready to make adjustments along the way based on real-time insights and market feedback. This iterative learning approach allows you to adapt and optimize your pivot strategy as you progress.
- Communication and Transparency
Pivoting is not a "one person's thing". That's why effective communication is crucial during a pivot. Keep your team members, stakeholders, and customers informed about the changes and the reasons behind them. Share your vision, goals, and progress transparently to build trust and alignment. Communicate the benefits of the pivot and how it will address customer needs or market trends. Clear and transparent communication helps maintain support and enthusiasm throughout the pivot journey.
- Pivot as many times as possible
Don't give up on the startup life if you believe you may need to shift direction more than once before you find the perfect path because many businesses pivot more than once. To prevent losing time, energy, and money, you must pivot as soon as you can, whether it be once, twice, or many times.
Conclusion
The decision to pivot should be driven by thorough analysis, market research, and a clear understanding of your business's strengths, weaknesses, and potential opportunities. It requires thoughtful consideration and a willingness to embrace change. When you implement these strategies with careful consideration and adaptability, you can be sure to navigate the pivot process effectively. Embrace the opportunity to reimagine your business, seize new opportunities, and position your startup for long-term success.
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