Understanding a Business Pivot
A business pivot refers to a strategic shift made by a company when it decides to change its business model, product line or target market. This is often driven by the realization that the initial business strategy is not bringing the desired results or that a different path may potentially unlock more value.
In practice, the pivoting process might mean launching a new product or service, focusing on a different customer segment, or radically changing your product delivery. For example, a restaurant might pivot to offer takeaway services when the current model falls through due to external factors. FreshDirect, a popular online grocer, originally started as a B2B (business-to-business) service for restaurants and retailers but later pivoted to a B2C (business-to-consumer) model, essentially becoming an online supermarket.
Pivoting isn’t about making minor tweaks to improve your business. Instead, it’s about making fundamental strategic changes to your business model or value proposition to better serve your customers and achieve your business objectives.
Recognizing When a Pivot is Necessary
The decision to pivot should never be taken lightly. It can be a risky move that may change the entire course of a company. So, what are some signs that it might be time to pivot?
1. The Market Doesn’t Respond: If your product or service isn’t gaining traction in the market, it could be a sign that you need to change direction. This might mean the market doesn’t need your product, doesn’t understand it, or there’s too much competition.
2. Sales are Stagnating or Declining: If your growth has plateaued or is on the decline, it might be time to pivot. It’s normal for growth to ebb and flow but a constant stagnation or decline could be an indicator that something fundamental needs to change.
3. The Business Isn’t Sustainable: If your current operational costs are too high or profits are too low to be sustainable in the long-term, a pivot might be necessary. You might need to switch to a more lucrative market, improve your product, or streamline your operations.
Implementing a Successful Business Pivot
Successful pivots require strategic thinking, careful planning, and precise execution. They also often require a leap of faith, because you can’t foresee every outcome. Here are some steps to follow:
1. Identify the Need: Before you pivot, make sure you have accurately pinpointed the cause of the problem. Conduct a thorough market research and be brutally honest about your strengths and weaknesses.
2. Plan: Once you’ve decided to pivot, it’s important to approach the process strategically. Create a detailed plan outlining what you want to change, how you will do it, and what you expect the outcomes to be.
3. Communicate: Get buy-in from all stakeholders, including employees, investors, and customers. Explain your reasons for the pivot and how it will add value.
4. Take Measured Steps: Pivot doesn’t mean doing a complete 180. Start with small, measured steps, monitor the results, and adjust as necessary.
5. Be Adaptable: Remain open to feedback and ready to make changes.
Pivoting is a bold move and it involves a degree of risk. But often, it’s a risk worth taking. If executed properly, a pivot can help you find new market opportunities, ignite growth, and ensure your business’s success and sustainability in the long run.