Business owners have to be adaptable. As much as we like to plan and strategize to reach our goals, sometimes things occur outside of our control, making it necessary to change course. It’s as much a part of business as it is life. So, when it’s time to change direction, how do you develop a pivot strategy? What considerations do business owners have to make to implement a successful pivot? So, let’s take a look at pivot strategies and think through what a successful pivot in business looks like.
Follow Along With The Financially Simple Podcast!
This week on The Financially Simple Podcast:
Why you might need to pivot (1:51)
Pivoting doesn’t indicate failure (3:53)
Take the long view (8:28)
Don’t neglect short-term sustainability (11:41)
Listen to outside perspectives (14:31)
Communication is vital (17:06)
What Does a Pivot Strategy Say About Your Business Acumen?
Although a business pivot marks a dramatic shift from your original model or plan, it doesn’t mean you’ve failed. Instead, pivoting could indicate that you’re a savvy business owner who recognized a shift in technology or market standards and modified your business to take strategic advantage of the change. In fact, many of the biggest companies in the world got where they are today because of a successful pivot strategy. Let’s look at a few examples.
Netflix began as a by-mail DVD rental service. They pivoted to become a streaming video platform, and then once again when they added their own production company. As a result, they’ve grown their Market Cap Value to $109B over the last decade. Similarly, Instagram began as a platform called Burbn. It was originally designed to be a mobile check-in app, but its founders quickly realized that it was too similar to Foursquare. They decided to streamline the app, focusing on its photo capabilities, and sold it to Facebook for $1B 2 years later.
But successful pivot strategies aren’t new. Play-Doh was originally launched in 1912 under the name, Kutol. The product was marketed as a cleaning product that could be used to remove coal soot left on walls by the coal-burning furnaces that were common in that day. As gas heating grew in popularity, the company knew it needed to pivot. The company began adding bright colors to its product line and changed the name to avoid the threat posed by gas heat. Now, the brand is an essential part of childhood.
How to Pivot Effectively
Like the companies I’ve just mentioned, you can successfully change directions if you understand how to pivot in business effectively. To help with preparing pivot strategies, I’ve come up with four key actions that each of the businesses above took when pivoting. So, let’s take a closer look at these four keys.
Take the Long View
The first thing you might notice about the businesses I mentioned is that they all saw the threats to their businesses well before they were able to do any real damage. You could achieve this by conducting regular SWOT analyses of your business. This can help you to assess where you’re strengths lie and emphasize them while working to strengthen your weaknesses. But perhaps even more beneficial when building pivot strategies is the ability to define your threats and opportunities.
If Netflix or Kutol hadn’t looked at developing trends, they wouldn’t have been able to take potentially threatening developments and turn them into lucrative opportunities. Therefore, it’s a good idea to remain vigilant, keeping an eye on the future of your business.
Remember Short-Term Sustainability
Although it may be necessary to pivot, it’s not always possible to go all in on your new direction. When Netflix began to venture into the streaming side of things, they continued offering their original offering. At first, streaming was introduced as a way to “fill the gaps” while subscribers waited for their DVDs to arrive. This was important to the success of their pivot because it provided stability and support as they shifted to the new business model.
Additionally, by starting small, you can monitor how your changes are impacting your business’s overall health. This can also make the change more palatable for your existing customers. It may be best to simply focus on a single feature, at first. Much like Instagram focusing on the photo-sharing feature of its original idea, you may find that the answer already exists in your business.
Listen to What Outside Voices are Saying
I’m a firm believer in keeping your ear to the ground when it comes to the latest in business and consumer trends. Knowing what consumers want and staying on top of ever-changing business technologies can help you remain relevant, no matter what industry you’re in. In the case of Play-Doh, knowing how and when to pivot came from a combination of newly emerging heating technology and a nursery school teacher.
Gas heat was threatening Kutol’s relevance. Joseph McVicker knew that his company would be in trouble if they didn’t take immediate action. While trying to decide what to do with his product, he was approached by his sister-in-law, a nursery school teacher who had been using the soft, malleable compound in place of modeling clay for her young students. She explained that the compound was easier for their hands to manipulate than its harder counterpart. But what if you don’t have a sister-in-law with the next great idea?
Consult a trusted business advisor. When considering a pivot in business, working with a qualified advisor can provide many benefits. How can they help?
They Provide an Objective Point of View
I’ve said many times that, as business owners, we’re prone to proximity blindness. It’s easy to fall into the trap of seeing things from a singular perspective when you’re as close to the subject as business owners are with their companies. A business advisor can help provide a fresh perspective that isn’t emotionally attached to a particular outcome. But they can help in other ways, beyond merely acting as a sounding board for your ideas.
Advisors Can Provide Additional Research
Although you’re likely conducting your own market research, a good advisor will do theirs as well. Conducting their own research gives your advisor the ability to really dig in to find what’s taking place in your business, your market, and with your competition. Ultimately, this could provide additional information that could help determine your best course of action. But now it’s time to look at the final key action to take when creating a business pivot strategy, and this one is very important.
Communicate with Your Team
As with any type of change, communication is critical to a successful pivot strategy. Keep in mind that the pivot will affect your employees and could make their jobs more difficult, even if only for a short time. Therefore, you must communicate changes in a way that generates buy-in from your team.
Explain the why before the how and be willing to answer questions head-on. The more transparent you are, the more likely it is that your team will trust your motivations. Take the time to properly train staff in new policies and procedures that arise from the pivot. You could use this time to demonstrate how the change could benefit them directly through new or enhanced professional skills.
Friends, sometimes you have to evolve to survive in the business world. Needing to pivot doesn’t mean you’ve failed in your original plan. Oftentimes, it simply means that the landscape has changed. Responding to those changes in a way that helps your business continue to thrive is just good entrepreneurship. Staying vigilant and remaining agile is a good way to remain in business for years to come.
I know life is hard and it can be frustrating. But life is good, friends. It really and truly is. Building a pivot strategy can be frustrating. But it doesn’t have to be. If you remember these four key actions, you can make pivoting in business at least, financially simple. Let’s go out and make it a great day!
If you found yourself needing to pivot your business, product, or service, who would you talk to? Do you have a trusted business coach or advisor that will walk alongside you in that process? Reach out to our team. We have people all over the country who want to help you reach your goals and achieve your vision.