In the beginning, a new venture is essentially a collection of hypothesis. Even with market research in hand, at its core, a business plan is mostly an educated guess about what customers want.
As a result, the chances are extremely high that one or more aspects of your original business plan will be flawed in some fashion, or require a major change in direction. What separates the best entrepreneurs from the rest is their ability to recognize when a particular idea, direction or even product is no longer viable—and adjust rapidly.
What is pivoting?
A “pivot” is a substantive change to one or more of the nine business model components. Pivoting does not always entail a complete abandonment of a business model—it can be an evolution of service delivery, a change in the product to meet the needs of a market, a shift in marketing or a change in the revenue model, among others. Put simply, a pivot is a shift in execution in order to adapt to a problem.
Nearly every successful company since the beginning of time has had to change its strategy to survive and achieve growth. Before a single tweet had ever been posted, Twitter was a podcast directory called Odeo. Instagram rose from the ashes of Burbn, a failed social check-in app.
In some cases, one pivot isn’t enough. Take Hewlett Packard. The Silicon Valley giant began as a calculator and measurement instruments business before turning into a computer and printer manufacturer. Most recently, they have pivoted again to focus on enterprise-level IT services.
A thoughtful and well-timed pivot can save a company, create growth and in some cases, be a breakthrough that allows for command over of an entire industry. The key is to identify what isn’t working and pivot away from it in the direction of a new strategy.
How do you know when to pivot?
If customer acquisition turns out to be more difficult or costly than originally anticipated, it’s time to take an objective look at the reason why. Does your value proposition resonate with your audience and are you clearly communicating the product benefits? Are you utilizing the best channels to reach your audience? Is your product price competitive? If you answer no to any of these questions, consider a pivot.
Maybe you’re talking to the wrong customers. Maybe the problem you are solving isn’t painful enough to motivate your intended customer. Or maybe, your market just isn’t large enough to support your big idea. In each of these cases, it might be time to rethink your approach
Remember to listen to your existing customers—their feedback is priceless. Watch how they respond to your product. Are they using it in an unexpected way? Do they feel restricted by its current functionality?
And of course there is the ultimate question; can you scale your operations using your current model? If not, it might be time to pivot toward profitability.
How do you pivot?
Whether the news comes from analytics, surveys, or face-to-face interviews with your customers—once you identify the problem, it’s time to determine what to do about it.
Maybe you need a complete overhaul like Twitter once did. Or, perhaps you can make a series of tweaks to get over the next hurdle. Either way, remember that this new direction is also little more than an educated hypothesis. You still won’t have all the answers and you’ll still need to measure the impact of your pivot.
Maintaining an open mind thought this process is key. You have to be willing to pivot again and again, testing new ideas and directions until you find something that works for you, your customers and your business model.
It is natural to feel uneasy when you discover your original business plan won’t get you to the top of the mountain, but a startup that neglects to see the opportunity buried inside each challenge will not succeed long-term. Pivoting can be painful, but it also offers a change to get your venture back on the path toward growth and scalability.
For more useful tips on getting your venture started the right way, check out JumpStart’s helpful Entrepreneur Toolkit. And don’t forget to sign up for Connect for Entrepreneurs, our monthly newsletter giving you more helpful advice along with local success stories and lists of local funding/networking opportunities.