The word “pivot” gets thrown around a lot, especially in the tech startup industry. But it’s applicable in all types of businesses, big or small. Pivoting refers to a shift in strategy. Essentially, it refers to the decision to abandon Plan A for another more suitable plan. The Financial Times defines it as, “The tortured path that most start-ups go through to find the right customer, value proposition, and positioning.”
The decision to pivot can be a difficult one mainly because in most cases a lot of time and money have already been invested in the startup idea or product. It can be tough for a business owner to then decide to move in an entirely different direction. But time and money aside, pivoting can be the lifeline that keeps your company from going under and just the thing to project it onto the right path.
Consider Starbucks. When they started up in 1971, the company was in the business of selling coffee beans. It took the vision of Howard Schultz (recently retired Starbucks CEO) to transform the company into a European-style coffeehouse where people can come to enjoy freshly brewed coffee as well as buy coffee beans. What Starbucks essentially did was to shift their initial business idea to include a customer experience while remaining focused on their original product line.
When it comes to pivoting, timing is crucial. As is money. With any new business startup it soon becomes apparent if your product is making the required revenue or not. You need to take a close look at your sales reports to see if your product is sustainable in the long run. If it’s not, then pivoting might be the answer.
Realising that a strategy change is needed is one thing but knowing in which direction the change needs to go, can be more of a head-scratcher. Sometimes all that is required is a slight tweak to your product. Other times the entire end goal might change, as in the case of the American gum manufacturer Wrigley’s. When they started out they were in the business of selling soap and gave free gum to all their customers. It soon became apparent that their customers were more interested in the gum than the soap. Subsequently, Wrigley’s made the clever decision to pivot. The company is now worth billions.
Evidently, it pays to listen to your customers. A failing product doesn’t always mean all is not lost, you can still gain valuable information from the very customers who bought it. An article on pivoting for entrepreneurs in the Harvard Business Review stresses that, “You need to know [your customers] well enough to understand what’s important to them, what they care about, and how your product fits into their world.” Once you’ve established this and you can see clearly what they are after in a product, then it’s your move to build on that. The article also highlights the importance of shifting your approach from being product-focused to customer-focused.
Most pivoting experts agree on the importance of team input and sharing. While the decision to pivot may come from the top, it is essential to make sure your team is also on board. The last thing you want is a team that’s not fully behind the new change in direction. Keep them informed and up to date on why and how the shift is happening. This will ensure a smooth transition.