The Business Pivot – An Essential Survival Tool
So your new company is off and running like Usain Bolt. Monthly revenues are increasing. Financial backers are trying to pass you their business cards. All those early, vague and hopeful dreams seem to have come true.
Is it possible that you’ve been so busy toasting success that you’ve already missed warning signs of trouble? Here today, gone tomorrow as the saying goes. Often, the long term health of a company depends upon its ability to pivot.
No, this isn’t ballet class. And I’m not talking about Tim Duncan in the post. A pivot, as defined by Eric Ries in his book The Lean Startup, is: “a new strategic hypothesis that will require a new minimum viable product to test.”
Let’s go back to the sprinting startup. Maybe efforts to keep the foot on the accelerator are beginning to yield diminishing returns. It’s easy to understand how immense initial interest in a product might keep everyone’s eyes averted from paying adequate attention to… say… quality. Slowing down might feel counterintuitive when the engine fires so quickly.
The mainstream customers who will continue to pay the bills have much more demanding needs, and their enthusiasm appears to be waning. The problem might be that the customers who have taken a shine to your product are not the ones you anticipated having. A great predicament to be in if you’re equipped to adapt.
The Customer Segment Pivot
You have customers you didn’t expect, but your product wasn’t built for them. This situation can be painful and tricky. The team needs to focus less on growth, revenue, and profit and return to the vision of the company. Two actions are vital:
1) Determining who the real customers are. You were partially correct. You have a winning idea, but you need to identify the customers who will keep the business doors open and address their needs.
2) Overhauling the product if necessary. Here, the entire team must be willing to let go some of those early adaptors that captured so much interest. The time is right to ask what changes can be made in keeping with the spirit of the company.
A pivot is not so much a call to change as it is a way to acknowledge a wrong turn and choose an alternate path to continue successfully.
More Startup Pivots Eric Ries details:
- Zoom-in Pivot – A single feature in a product becomes the whole product
- Zoom-out Pivot – The whole project becomes a single feature of a much larger product
- Customer Need Pivot – The customer has a problem worth solving, but not the one originally anticipated
- Platform Pivot – A change from an application to a platform or vice versa
- Business Architect Pivot – A startup switches architecture
- Value Capture Pivot – Changing the way a company captures value
- Engine of Growth Pivot – A change in growth strategy to seek faster or more profitable growth
- Channel Pivot – Recognizing that a basic solution would be more effective through a different channel
- Technology Pivot – Discovering that a solution can be achieved through a completely different technology
It’s easy to spot the founder of a great company. End results always make the flashiest news. Success usually is much more about process. Pivots don’t always show up in the headlines, but the ability of a company to execute them will often determine if the final story resembles a flaming wreck or winner with the aura of inevitability. Identifying the proper pivot to make is a crucial element in long term growth.