Founders should be able to effectively pivot their operations when challenges arise. Many businesses have changed their concepts, adjusted expectations, and adapted to the changing circumstances they came across. In this blog, we will break down strategies and techniques that may help businesses effectively pivot in the face of challenge.
What is Pivoting?
Pivoting occurs when there is a shift in a business’s strategy – whether in the main product offering, the flow of business operations, or in the overall business model. Some examples of pivoting include turning a product feature into an entirely new product, changing a platform from a website to an application or vice versa, focusing on a new customer base, or utilizing new technology.
There are a few reasons why a business may decide to pivot away from their original business strategy. One hypothetical is that the business is not receiving the desired user traction. There may be one aspect of the business that is receiving significant attention while other product offerings are seemingly ignored. Economic conditions may have changed and there is not enough demand for your business anymore. These are all examples of moments when a startup may choose to pivot their operations to focus on another business aspect.
Types of Pivots
There are a few different types of pivots a startup may choose to utilize. A business may choose to pivot in their existing market by offering a new product or service to their existing customer base. However, this tends to be a pivoting strategy likely to fail. While they already have an existing product, they spend time and money developing a new product that is not guaranteed to work on their current customer base.
Repositioning your product is another type of pivot, which may yield better results than pivoting in the existing market. The product may not be the problem and discovering a new customer segment for the existing product may provide additional growth opportunities. In this same realm, if one aspect of your business is gaining significant traction and showing greater adoption potential than other product offerings, one option would be to capitalize on the aspects that are working, and perhaps remove the ones that aren’t.
The final type of pivot is the most extreme – develop something new entirely. Essentially starting over without a product idea or identified target market, this method of pivoting can come with the most challenges. It can be hard to part with a business idea a founder has become emotionally invested in, but sometimes it is necessary for growth.
Identifying the best time to pivot can be important for any business considering a pivot in their operations. Startups can attempt to reduce the associated risks with the goal of increasing the odds of positive outcomes. Truly, businesses may want to pivot as soon as they recognize the need to change directions. Many businesses pivot more than once over the course of the business’ life and pivoting as early as possible can help avoid wasting money, time, and resources.
Another strategy for successfully pivoting is developing a prototype before embarking on the pivot. Creating a minimum viable product (MVP) and testing potential customer bases before committing to a pivot can also help conserve money, time, and resources. Customer feedback can be invaluable when developing products and can help identify the right customer segment to target when embarking on a pivot.
Additionally, don’t feel the need to scrap all the work you have already done. Identify aspects that have been working that can be salvaged and reused once the startup has pivoted. Redirecting current resources towards the new goal can help the startup pivot more smoothly.
Successful businesses don’t usually brute force their way through unfavorable market conditions. If a strategy isn’t working, it may just not be working. Twitter, PayPal, Groupon, Slack, and Starbucks all pivoted their strategies when their current operations weren’t gaining the desired product market fit. While it may be difficult to abandon the prior strategy, look for the growth opportunities that would not be possible without a pivot. Some businesses may pivot once, others may pivot multiple times. The importance of pivoting is identifying what isn’t working, targeting the aspects that are working, and focusing on the potential for business growth.
The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.